A Foley Quick Hit: Project-Level Documents Take Center Stage

In terms of energy project development, financeable project-level agreements were historically an important diligence item, but today, these contracts have effectively evolved into major transaction documents. Recent tax regulations and shifting federal priorities have increased the commercial significance of development-stage agreements, pushing key terms into the spotlight and intensifying negotiations. Below, we briefly outline key provisions that both sponsors and financing parties are increasingly scrutinizing, as well as a few cautionary tales.

Key Takeaways

• Tariff risk allocation requires a deliberate commercial strategy at the outset.
  Because tariff exposure can materially alter project economics, tariff risk allocation can, and should, be heavily negotiated in project-level agreements, and there are a number of mechanisms at play in the market. Developers should enter negotiations with a clear sense of their risk tolerance and the impact various tariff scenarios may have