CARILEC: Development of a Prototype Power Purchase Agreement and Training Programme, 12-2011

7/31/2019 CARILEC: Development of a Prototype Power Purchase Agreement and Training Programme, 12-2011

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Prepared by: KEMA Inc. USA

DEVELOPMENT OF A PROTOTYPE POWERPURCHASE AGREEMENT AND TRAINING

PROGRAM

FOR THE

CARIBBEAN ELECTRIC UTILITY SERVICESCORPORATION (CARILEC)

Final ReportContract number: COMP 2-1Report date: December 7, 2011

Project: Inter-American Development Bank (IDB) funded Energy Efficiency and RenewableEnergy Project for the Caribbean Electric Utility Services Corporation (CARILEC)


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TABLE OF CONTENTS

AUTHORs NOTES ........................................................................................ 3

1 INTERPRETATION ..................................................................................... 5

2 SALE AND PURCHASE OF ENERGY ..................................................... 6

3 TERM ............................................................................................................ 7

4 CURRENCY, PAYMENTS AND BILLING ............................................... 8

5 PRE-OPERATION OBLIGATIONS ......................................................... 10

6 INTERCONNECTION ............................................................................... 12

7 METERING ................................................................................................. 14

8 OPERATION AND MAINTENANCE ....................................................... 16 9 MUTUAL WARRANTIES AND COVENANTS OF THE PARTIES ..... 21

10 DEFAULTS AND TERMINATION ......................................................... 23

11 FORCE MAJEURE ................................................................................. 27

12 INDEMNIFICATION AND LIABILITY ................................................... 30

13 INSURANCE ............................................................................................ 32

14 RESOLUTION OF DISPUTES ............................................................... 34 15 GOVERNING LAW ................................................................................. 35

16 NOTICES .................................................................................................. 36

17 MISCELLANEOUS PROVISIONS ........................................................ 37

18 SCHEDULES ........................................................................................... 41

Schedule 1- Defined Terms ................................................ .................................................. ...41

Schedule 2- Calculation of payments ................................................ ................................... 46

Schedule 3-Testing and commissioning .................................................. ........................... 50

Schedule 4- Interconnection facilities ............................................... ................................... 50

Schedule 5- Metering ........................................... .................................................. ...................53

Schedule 6-Technical specifications ......................................... ........................................... 57

Schedule 7- Operating Committee ............................................. ........................................... 60


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AUTHORs NOTES

The specific objective of this project is to develop a prototype power purchase agreementdocument to facilitate renewable energy projects. This PPA is holistic in the sense that it willbe applicable to different type of renewable projects.

Regarding this prototype of power purchase agreement we have to remark that:

1. This prototype of power purchase agreement outlines the basic provisions commonlyfound in power purchase agreements in respect of international, private renewablepower projects. There are, of course, an infinite number of variations that the partiescould utilize in drafting an actual agreement. This document should be viewed as anexample that raises issues for discussion and this prototype of power purchaseagreement has to be fine-tuned to each specific situation.

2. The text of the Agreement should be read in conjunction with the attached endnotes,which contain explanatory notes, comments and suggestions to aid the reader. Indrafting an actual power purchase agreement, neither endnotes nor footnotes should

be included.3. Most privately owned electric power projects will be financed through a combination

of debt and equity, with the debt portion often structured on a project finance basis.Perhaps the most important factor as to whether or not the financial markets will viewa given project as financeable is the power purchase agreement. Thus, in draftingthis Agreement, we have attempted to cover all the key elements that developers,utilities and lenders typically will expect to be included in a well-structured purchaseagreement. All power purchase agreements share certain characteristics and eachpower purchase agreement is fact-and-circumstance-specific and is generally theproduct of extensive negotiation. Specific Articles of the document should be adaptedto fit with the specific circumstances of that electric power project

4. In this Prototype Agreement we have assumed that the generating facility will not becommissioned in stages (generating unit by generating unit) but, instead, will comeon line as an integrated whole on its Commercial Operations Date.

5. Nevertheless, we occasionally highlight in the text and endnotes of the PrototypeAgreement ways in which the Prototype Agreement might differ if the conditions differfrom our assumptions.

6. Schedule 1 sets forth the definitions of the capitalized terms used both in the text ofthe Prototype Agreement and in the endnotes to the Prototype Agreement. In anactual power purchase agreement (with no endnotes), fewer definitions will berequired.

7. Schedules to a Power Purchase Agreement are largely fact-and technology-specific.However, when appropriate in the text and in the endnotes, we do indicate relevantinformation that would likely be included in the Schedules.


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AGREEMENT

BETWEEN :

[ Legal name, form and country of Developer/Seller entity ] ) having its registeredoffice at [complete Address of Developer entity] ("Developer) and

[ Legal name, form and country of utility/Buyer entity ] ) having its registered officeat [complete Address of Utility entity] ("Utility). Developer and Utility may be referredto individually as a "Party" and collectively as "Parties" made this date, [date of agreement execution].

WHEREAS:

(A) Developer plans to design, finance, construct, operate and maintain a [name,description, location, and capacity or energy output of Facility] ("Facility")

(B) Developer agrees to make available and to sell the Net Energy Output 1 fromFacility to Utility; and

(C) Utility wishes to purchase all the net electrical energy generated by the Facilitypursuant to the terms and conditions in this Agreement;

NOW, THEREFORE, in consideration of the mutual benefits to be derived, the

representations, warranties, conditions and promises contained in this Agreement,and intending to be legally bound by this Agreement, the Parties agree as follows.


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1 INTERPRETATION

1.1 Interpretation

In interpreting this Agreement, capitalized terms and expressions shall have the meaningsgiven them in Schedule 1 (Defined Terms) or the text in which they appear. Terms not

defined in Schedule 1 (Defined Terms) shall have the meanings ascribed to them in theOxford English dictionary or, for terms of art or where the context indicates, the meaningsgiven the terms by common usage in the industry.

1.2 Further, in interpreting this Agreement:

1.2.1 Except where expressly stated otherwise, the headings of the Articles areprimarily for convenience and in the event of a conflict between a headingand the more specific provision of a Article, the language of the Article shallcontrol in construing the provisions of this Agreement;

1.2.2 The singular includes the plural and vice versa;

1.2.3 References to Articles, Sub-Sections Schedules and similar designations are,unless the context otherwise requires, references to designations in thisAgreement

1.2.4 References to any agreement, enactment, ordinance or regulation includesany amendment thereof or any replacement in whole or in part.


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2 SALE AND PURCHASE OF ENERGY

2.1 Sale to Utility.

Subject to, and in accordance with the terms of this Agreement, the Developer shall makeavailable and sell to Utility, and Utility shall purchase from Developer, the Net Energy Outputof the Facility, up to a maximum of [maximum output capacity or lesser contracted amount] 2 plus or minus [variance allowance, based on manufacturer specifications] percent, uponand after the Commercial Operations Date.

During the Commissioning of the Facility, Utility shall pay to the Developer in arrears on the[_____] Business Day of each Month, the Prices according to Schedule 2.

2.2 Energy Take.

Upon and after the Commercial Operations Date, Utility shall accept energy up to amaximum total energy equivalent of [ contracted maximum ] kWh plus or minus [ certain percentage ], provided that Utility may accept energy above this level at its sole discretion.

2.3 Sale to Developer.

Subject to, and in accordance with, the terms of this Agreement, Utility shall make availableand sell to the Developer, and the Developer may purchase from Utility, capacity andenergy, on the same basis as Utility's then prevailing tariff for electricity sold to industrialcustomers.

2.4 Prices.

The amount of the payments due from Utility to Developer for Net Energy Output from theFacility shall be calculated in accordance with Schedule 2 (Calculation of Payments) using

the prices defined in that schedule. The payments shall be made at the times specified inArticle 4.2 (Billing and Payment).


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3 TERM

3.1 Initial Term.

The initial term of this Agreement shall commence on the date of this Agreement and shallend [ length of agreement term] from the Commercial Operations Date, unless thisAgreement is terminated earlier pursuant to the provisions of this Agreement allowing fortermination in the event of a breach or default by either of the Parties ("Early Termination").Any Early Termination of this Agreement shall be without prejudice to all rights andobligations of the parties accrued under this Agreement prior to such termination.

3.2 Renewal Term. 3

This Agreement may be extended by either Party for a single additional period of [agreed renewal term] years, on the terms defined by this Agreement, provided that:

(a) The Party seeking an extension has made a prior written request to extend theagreement to the other Party, such request to be made not more than 36 months and notless than 24 months before the end of the initial term of this Agreement;

(b) The Party receiving a request to extend the agreement has not rejected the request in awritten response to the Party seeking an extension, given not more than 3 months followingreceipt of the request for extension; and

(c) There is not an event of default of either Party, as defined in Article 10.1 (DeveloperDefaults) and 10.2 (Utility Defaults), on the date the extension begins.


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4 CURRENCY, PAYMENTS AND BILLING

4.1 Currency.

All payments required pursuant to any provision of this Agreement (including provisionsapplicable in the event of any breach, default, or other failure of performance) shall be

calculated and paid in [agreed currency ] .4

4.2 Billing and Payment

4.2.1 Monthly Invoices .

Within [number] days after the end of each month, each Party shall prepareand deliver to the other Party an invoice reflecting amounts payable by theother Party pursuant to this Agreement.

Developer's invoice to Utility shall include calculations, in reasonable detail, ofthe amounts due pursuant to Schedule 2 (Calculation of Payments).

Utility's invoice to Developer shall include calculations in reasonable detail ofthe amounts owed to Utility with specific reference to applicable tariffs.

4.2.2 Special Invoices and liquidated damages .

If there is an event of default, breach, or other failure to perform for which thisAgreement specifies payment of amounts as liquidated damages orotherwise, the Party to be compensated shall prepare and deliver to the otherParty a special invoice that shows the calculation of any amounts duepursuant to this Agreement, specifies the provisions applied, and details theperiods of delay or other factors on which the claim is based. (See Schedule

2)4.2.3 Late Payments.

Payments not made by the due date shall accrue daily interest at the greaterof [specific daily interest rate or identified daily interest rate proxy] 5 or themaximum lawful rate. Any such charges for interest shall be calculated by thepaying Party and included with payment of the invoice without the need for anadditional invoice for those amounts.

4.3 Disputed Invoices.

If either Party, on reasonable grounds, disputes any portion of a monthly invoice or thecorrectness of the amount received in payment of an invoice, then that Party shall, within[________] days of the receipt of such invoice or payment, serve a notice to the other Partyindicating the amount and basis of the dispute. Neither Party shall be required to pay adisputed amount pending resolution of the dispute. The dispute shall be settled by mutualdiscussion and, if necessary, resolved pursuant to Article 14 (Resolution of Disputes). If it isdetermined that either Party owes the other an amount of money, the owing Party shall,within [_____] days after its receipt of such determination, pay such sum together with


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interest at a rate equal to [specific interest rate or identified interest rate proxy ] to the otherParty in the manner specified for payment of the disputed invoice.


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5 PRE-OPERATION OBLIGATIONS

5.1 Construction and Commissioning.

Developer shall undertake and be obligated (a) to complete construction of the Facility and(b) to achieve successful completion of the required test operations prescribed in Schedule 3(Testing and Commissioning) no later than the Required Commercial Operations Date. Inthe event that the Facility does not successfully complete the required test operationsprescribed in Schedule 3 (Testing and Commissioning) on or before the RequiredCommercial Operations Date, and Utility is in full compliance with all its material obligationsunder this Agreement, then Developer shall be liable to Utility in an amount to be determinedin accordance with the liquidated damages provisions of Schedule 2 (Calculation ofPayments).

5.2 Permits and Licenses.

Developer, at its sole cost and expense, shall acquire and maintain in effect all permits,licenses and approvals required by all local agencies, commissions and authorities with

jurisdiction over Developer or the Facility, so that Developer may lawfully perform itsobligations under this Agreement.

5.3 Credits, Grants, and Preferences.

Developer shall be responsible for applying for and obtaining any available and applicable

tax credits, grants, loans or preferences from governmental or other institutions. Utility shallcooperate with Developer by providing requested documentation or other confirmationrelating to the Facility or to this Agreement, subject to the confidentiality terms of Article 17.4(Confidentiality).

5.4 Energy before Commissioning 6

5.4.1 Upon the Developer's request, Utility shall provide energy for construction,testing, commissioning, start-ups and emergencies, subject to availability andUtility's ability to deliver such energy to the Facility. The Developer shall pay

Utility for such energy in accordance with Utility's then prevailing tariff rate forindustrial facilities. Utility is hereby authorized to set-off the charges for suchenergy delivered by Utility to the Developer pursuant to this Article 5.4.1against any Energy Payments due and owing to the Developer.

5.4.2 Prior to the Commercial Operations Date, Utility shall use reasonable effortsto accept all energy produced by the Facility during testing performed


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pursuant to the Construction Contract and Commissioning, and Utility shallpay the Developer for such energy at the rate set forth in Article 2.1. 7

5.5 Inspection

Utility and/or its representatives shall have the right to observe the progress of the

construction of the Facility and the Testing and Commissioning of the Facility in accordancewith Schedule 3. The Developer shall comply with all reasonable requests of Utility for, andassist in arranging, any such observation visits to the Facility. Such visits to the Facility shallnot be construed as an endorsement by Utility of the design thereof nor as a warranty byUtility of the safety, durability or reliability of the Facility. 8

5.6 Access to Site

Upon reasonable prior notice from the Developer and at reasonable times, Utility shall grantthe Developer reasonable access to any lands owned by Utility that are necessary for

designing, financing, constructing, operating and maintaining the Facility.


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6 INTERCONNECTION

6.1 Developers Responsibilities.

6.1.1 In accordance with the requirements of Schedule 4 (Interconnection),Developer shall design, construct, install, commission, own, operate andmaintain the Interconnection Facilities, and any parts thereof, in accordancewith the terms of this Agreement.

6.1.2 Developer shall design, construct, install, commission, own, operate andmaintain all auxiliary and interconnecting equipment on the Developer's sideof the Interconnection Point, provided that Utility shall have the right to setrequirements to the interconnection facilities, such as technical, operationaland safety requirements, and shall furthermore have the right to view suchequipment and to object to the use of any equipment if, in the reasonableopinion of Utility, the use of such equipment would adversely affect Utility's

grid or system.6.1.3 Developer shall complete construction of the Interconnection Facilities

[number of days ] prior to the scheduled Commercial Operations Day.

6.1.4 Upon completion of the interconnection facilities described in Article 6.1.1 andArticle 6.1.2, Developer shall test such Interconnection Facilities inaccordance with the procedures set forth in Schedule 4

6.1.5 Developer's Interconnection Facilities shall be connected to Utility's Grid bymeans of suitable switchgear and protective devices.

6.2 Utilitys Responsibilities.

6.2.1 Utility will use its best endeavor to assist the Developer in obtaining, in atimely manner and at a reasonable cost, all permits, permissions and wayleaves necessary for the construction of the Interconnection Facilities andassociated equipment. Such assistance shall not be unreasonably withheld.The reasonable expenses of Utilitys assistance shall be the responsibility ofDeveloper.

6.2.2 Utility will be responsible for the design, construction, installation,commissioning and testing of any new transmission lines (and associatedswitchgear and protective devices) needed to connect the Facility at the

Interconnection Point to Utilitys Grid. Utility shall own, operate and maintainthe line and associated equipment.

6.2.3 Utility shall complete construction of the transmission line [ number of days ]prior to the scheduled Commercial Operations Day

6.3 Access to Facility.


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Developer shall permit Utility such access to the Facility as Utility shall require for the testingof Interconnection Facilities and Developer shall cooperate with Utility in such testing,provided that no testing, carried out by Utility, shall impose upon Utility any liability, or relieveDeveloper from any liability that it would otherwise have had for its negligence or otherwrongful act in the design, construction, operation or maintenance of the InterconnectionFacilities.

6.4 Protective Devices.

6.4.1 Each Party shall provide the other Party, in advance, written notice of anychanges to be made to the Facility or to any facility on Utilitys grid that mayaffect the proper coordination of protective devices between the two systems.

6.4.2 Developer shall not disable or otherwise change or modify any protectiveequipment in its Interconnection Facilities or change or modify the operationor settings thereof without first requesting and receiving the written approvalof Utility, which approval shall not be unreasonably withheld.

6.4.3 With reasonable notice to Developer, Utility may require Developer to modifyor to expand the protective devices by means of which the Facility isconnected to Utilitys grid. In such event, Utility shall reimburse the Developerfor the reasonable costs of such modification or expansion.

6.5 Testing of Interconnection Facilities

The Parties shall cooperate in testing the Interconnection Facilities in accordance withSchedule 3 and the schedule developed by the Operating Committee (but in no event laterthan the time provided in Article 6.1.3) and at such other times thereafter as either Party mayreasonably require. Each Party shall bear its own costs in connection with any such testing.


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7 METERING

7.1 Ownership of Metering System.

7.1.1 The Developer, at its expense, shall design, finance, construct install, own,procure, operate and maintain the Metering System in accordance with

Schedule 5.9

7.1.2 The Developer, at its expense shall design, finance, construct, install, own,operate and maintain meters and metering devices for backup purposespursuant to Schedule 5 (Backup Metering System) in addition to theMetering System. 10

7.2 Testing and Inspection of Metering Equipment.

Developer shall inspect and test, at its own expense, the Metering System and the BackupMetering System for accuracy in accordance with Schedule 5 by the date required for thecompletion of the Interconnection Facilities under Article 6.1.3 and thereafter at intervals of

not less than [ ] Days. With respect to each testing of the Metering System or theBackup Metering System, Developer shall give the Utility no less than [ ] hours advancenotice of such testing, and the Utility may have a representative present during any suchtesting, as well as during any inspection of the Metering System or Backup Metering Systemor adjustment thereof (but the test, inspection or adjustment may be taken if the Utility hasno representative present). 11

7.3 Measurement of Net Energy Output.

7.3.1 Developer shall read the Metering System Monthly on the [ ] BusinessDay of each Month (or such other Day as may be agreed upon by the

Operating Committee) for the purpose of measuring the Net Energy Output 12 .Developer shall give the Utility not less than [ ] hours notice of itsintention to read the Metering System. The Utility shall have the right to havea representative present during any such reading (but the reading may betaken if the Utility has no representative present). Developer shall take andrecord such reading together with a photographic record thereof, andDeveloper shall maintain a log of all such meter readings. In the event thatthe Metering System is not in service as a result of maintenance, repairs ortesting, then the Backup Metering System shall be used during the period thatthe Metering System is not in service and the foregoing provisions of this

Article 7.3.1 shall apply to the reading of the Backup Metering System

7.3.2 When, as a result of any test pursuant to Article 7.2, the Metering System isfound to be inaccurate by more than [ ] percent or is otherwisefunctioning improperly, then the correct amount of Net Energy Outputdelivered to Utility for the actual period during which inaccuratemeasurements were made, if any, shall be determined as follows:


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a) first, the readings of the Backup Metering System, if any, shall be utilized tocalculate the correct amount of Net Energy Output, unless a test of suchBackup Metering System, as required by either Party, reveals that the BackupMetering System is inaccurate by more than [ ] percent or is otherwisefunctioning improperly;

b) if the Backup Metering System is not within the acceptable limits ofaccuracy or is otherwise functioning improperly, then the Developer and Utilityshall jointly prepare an estimate of the correct reading on the basis of allavailable information including deliveries of Net Energy Output during periodsof similar operating conditions when the Metering System was registeringaccurately;

c) the difference between the previous payments by Utility for the period ofinaccuracy or improper functioning and the recalculated amount shall beoffset against or added to the next payment to the Developer under thisAgreement, as appropriate. In no event, however, shall any adjustments be

made for any period prior to the date on which the Metering System was lasttested and found to be accurate within plus or minus [ ] percent and nototherwise functioning improperly. In the event that Utility and the Developerfail to agree upon any estimate pursuant to this Article 7.3.2, then the mattermay be referred by either Party pursuant to Article 14

7.4 Sealing, Repair and Replacement of Meters

7.4.1 The Metering System and the Backup Metering System shall comply withSchedule 5 and shall be jointly sealed. Such seals shall be broken only byDeveloper personnel in the presence of personnel from the Utility when the

Metering System or the Backup Metering System is to be inspected, tested oradjusted.

7.4.2 When any component of the Metering System is found to be outsideacceptable limits of accuracy or otherwise not functioning properly, Utilityshall forthwith repair, recalibrate or replace such component of the MeteringSystem. Similarly, when any component of the Backup Metering System isfound to be outside acceptable limits of accuracy or otherwise not functioningproperly, the Developer shall forthwith repair, recalibrate or replace suchcomponent of the Backup Metering System. Upon the completion of anyexamination, maintenance, repair or recalibration of, or replacement of any

component in, the Metering System or the Backup Metering System, therelevant metering system shall be jointly sealed.

7.5 Telecommunications Equipment

The Developer shall provide at its sole cost and expense the telecommunications equipmentspecified in Schedule 5. The selection and installation of items to be provided by theDeveloper in accordance with this Article 7.5 shall be subject to the prior written approval ofUtility.13


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8 OPERATION AND MAINTENANCE

8.1 Operating Procedures

The Developer and Utility shall jointly develop written operating procedures for the Facility nolater than [ ] Days prior to the Required Commercial Operations Date. Such operating

procedures shall be based on the designs of the Facility, the Interconnection Facilities andthe Utility Grid System and shall be consistent with the Functional Specifications; and shalldeal with all operational interfaces between Utility and the Developer, including method ofday-to-day communication, key personnel lists, clearances and switching practices, outagescheduling, capacity and energy reporting, operations log and reactive power support. Thewritten operating procedures shall be subject to the prior written consent of Utility. Thisconsent shall not be unreasonably withheld or delayed.

8.2 Operating Standards.

During the term of this Agreement, Developer shall operate and maintain the Facility in a

manner consistent with Prudent Utility Practices and in accordance with the technicalspecifications and requirements set out in Schedule 6 (Technical Specifications).

8.3 Operation by the Developer.

8.3.1 During the term of this Agreement, beginning on the Commercial OperationsDate, Developer shall keep Utilitys designated control center, from whichUtility will interface with the Facility for operational purposes, informed as tothe capacity of electrical energy available at the Facility and shall immediatelyadvise the designated control center of any change in this capacity.

8.3.2 Subject to the Functional Specifications, the Developer shall operate and

maintain the Facility in such a manner so as not to have an adverse effect onUtility's voltage level, voltage waveform or transmission and distributionsystem.

8.3.3 The Developer shall, in accordance with the Minimum FunctionalSpecifications, install protective relays within the Facility and/or theInterconnection Facilities having ratings and characteristics approved byUtility, and, subject to the Minimum Functional Specifications, shall maintainthe settings of all such relays at the levels acceptable to Utility. TheDeveloper shall not change the settings of such relays without the priorwritten consent of Utility. This consent shall not be unreasonably withheld ordelayed.

8.3.4 Facility Performance. Developer shall be afforded adequate ScheduledOutage, Maintenance Outage and Forced Outage provisions to facilitatenecessary maintenance to the Facility provided that the average annual NetEnergy Output from the Facility during any [ for example five ] year period shallnot be less than [ amount that takes account of planned maintenance] MWh.


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8.4 Operation by Developer in the case of intermittent energy sources and otherrenewable energy sources (such as wind power, solar power, run of river hydro-power, biomass etc.) 14

8.4.1 Daily prediction of the Facilities output

Developer will provide Utility a daily prediction of the Facilitys output for each

hour of the next day.8.4.2 Power Production expectations for 12 months

At the beginning of each month Developer will provide Utility with powerproduction expectations for the next 12 months to come.

8.5 Scheduled Outages.

8.5.1. At least [ ] Days prior to the Scheduled Commercial Operations Date,the Developer shall submit to Utility its desired schedule of Scheduled Outageperiods for the remainder of the Year in which the Scheduled CommercialOperations Date occurs. Thereafter, by [ date ] of each Year after the Year inwhich the Scheduled Commercial Operation Date occurs, the Developer shallsubmit to Utility its desired schedule of Scheduled Outage periods for thefollowing Year.

8.5.2 At least [ ] Days prior to the Scheduled Commercial Operations Dateand [ ] Months prior to the commencement of each Year after the Yearin which the Scheduled Commercial Operation Date occurs, Utility shall notifythe Developer in writing whether the requested Scheduled Outage periodsare acceptable. If Utility cannot accept any of the requested ScheduledOutage periods, Utility shall advise the Developer of a period when Utility

determines such unacceptable Scheduled Outage period can be rescheduled.Such rescheduled period shall be as close as reasonably practicable to therequested period, shall comply with the Minimum Functional Specifications,and shall be of equal duration as the requested period. The Developer shallconduct Scheduled Outages only during periods agreed to in writing by Utilityas aforesaid. 15

8.5.3 Commencing with the Commercial Operations Date, the Developer may notschedule more than a total of [_________] Facility Hours of ScheduledOutages during any Operating Year. 16

8.5.4 Utility may, upon [___________] Days prior written notice, require theDeveloper to reschedule a Scheduled Outage; provided, however, that Utilityshall not request that such Scheduled Outage be rescheduled in a manner ortime outside the Minimum Functional Specifications. 17

8.5.5 Developer shall use its reasonable endeavors to coordinate its maintenanceprogram for the Interconnection Facilities with the approved ScheduledOutages so as to minimize any disruption to the operation of the Facility.


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8.6 Forced Outages .

Developer shall use its reasonable efforts to limit Forced Outages. Developer shall beafforded Forced Outage provisions (including in the average annual Net Energy Outputrequirement of Article 8.3.) to facilitate emergency maintenance of the Facility when thecircumstances warrant.

8.7 Emergencies8.7.1 Emergency Plans .

Three months prior to the Commercial Operations Date, Utility and Developershall jointly establish plans for operating the Facility during an Emergencyaffecting Developer or Utility. Such plans shall include, without limitation,recovery from a local or widespread electrical blackout and voltage reductionto effect load curtailment.

8.7.2 Outage during Emergency .

During an Emergency, Developer shall supply such energy as it is able togenerate within the Technical Specifications of Schedule 6. If the Facility hasa Scheduled Outage or a Maintenance Outage and such outage occurs orwould occur coincident with an Emergency, for purposes of this Agreementthe Emergency shall be considered part of the Scheduled Outage orMaintenance Outage and Developer shall use all reasonable efforts toexpedite completion of the work to restore power supply as soon as possible.

8.8 Cessation of Operation.

If, after the Commercial Operations Date, Developer, other than because of an event ofForce Majeure, a Scheduled Outage, Maintenance Outage or a Forced Outage (which

Scheduled Outage, Maintenance Outage and Forced Outage does not cause the Developerto exceed the maximum outage allowed under the requirements of Article 8.3.4 Facility Performance above), allows Abandonment of the Facility without the prior written consent ofUtility, then Utility shall be entitled to enter the site and, in consultation with the OperatingCommittee established pursuant to Article 8.8 (Operating Personnel) and Schedule 7(Operating Committee), appoint a manager of suitable competence to manage and operatethe Facility, subject to the Technical Specifications of Schedule 6, and in accordance withPrudent Utility Practice until Developer demonstrates to the reasonable satisfaction of Utilitythat it can and will resume normal operations of the Facility. During any period that Utilityoperates the Facility pursuant to this Article, Utility shall be entitled to receive only suchconsideration as is reasonable (a) to pay the manager, at a level commensurate withindustry standards; and (b) to reimburse Utility for its reasonable and prudently incurredadministrative, operational and other expenses, during and arising from its operation of theFacility. Utility shall render a full accounting to Developer at regular intervals during theperiod of its operation of the Facility pursuant to this Article, and at the close of itsmanagement. Utility shall continue to make payments for Net Energy Output in accordancewith Article 2 (Sale and Purchase of Energy) and Schedule 2 (Calculation of Payments).


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During its operation of the Facility in accordance with the provisions of Article 8.7 above,Utility shall not be liable for any damage to the Facility or any part thereof or for any damageor loss suffered by the Developer or third party, except where such damage or loss iscaused by the gross negligence or the deliberate action or inaction of Utility.

8.9 Operating Personnel.

8.9.1 Operating Committee .The Parties shall establish an Operating Committee composed of [odd number] members. Developer and Utility shall each appoint an equalnumber of the members, and the Utility shall appoint the Chairman of theOperating Committee. 18 The obligations and responsibilities of the OperatingCommittee and the rules governing meetings of the Operating Committeeshall be as set forth in Schedule 7.

8.9.2 Qualifications and Coverage.

For the purposes of (a) operating and monitoring the Facility and

(b) coordinating operations of the Facility with the Utility grid, Developer shallemploy, directly or indirectly, only personnel who are qualified andexperienced. Developer shall ensure that the Facility is being monitored bysuch personnel, remotely or otherwise, at all times, 24 hours each day and 7days each week commencing 14 days prior to the Commercial OperationsDate.

8.9.3 Long Term Service Agreement (LTSA). Developer may enter in a long termservice agreement to maintain the Facility throughout the term of thisAgreement. Developer shall submit such agreement to Utility for its priorwritten approval, which approval shall not be unreasonably withheld ordelayed. Neither such appointment nor the approval thereof by Utility,however, shall relieve Developer of any liability, obligation, or responsibilityresulting from a breach of this Agreement.

8.10 Inspection and Records.

8.10.1 Utility Inspections .

Utility shall have the right to visit, observe and examine the Facility and theoperation thereof, upon reasonable advance notice to Developer, for thepurpose of facilitating the technical operation and administration of this

Agreement. Such visits and observations shall not be construed as anendorsement by Utility of the design or operation of the Facility nor as awarranty by Utility of the safety, durability or reliability of the Facility and shallnot relieve Developer of any of its responsibilities under this Agreement.

8.10.2 Developer and Utility Records .

Each Party shall keep complete and accurate records and other data requiredby each of them for the purposes of proper administration of this Agreement.


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Among other records and data, Developer shall maintain an accurate and up-to-date operating log for the Facility, which log shall include (withoutlimitation) records of:

a) Real and Reactive Power production for each clock half-hour, andelectrical energy frequency and interconnection bus voltage at all times;

b) Changes in operating status, Scheduled Outages, Maintenance Outageand Forced Outages;

c) Any unusual conditions found during inspections; and

d) Any other items as mutually agreed upon by the Parties.

8.10.3 Copies of Records .

Either Party shall have the right, upon reasonable prior written notice to theother Party, to examine or to make copies of the records and data of the otherParty relating to the proper administration of this Agreement, at any timeduring normal office hours during the period such records and data arerequired to be maintained. All such records or data shall be maintained for aminimum of 60 calendar months after their creation, and for any additionallength of time required by regulatory agencies with jurisdiction over theParties. Upon expiration of such period, neither Party shall dispose of ordestroy any such records without 30 days prior written notice to the otherParty, and the Party receiving such notice may, at its option, elect to receivesuch records, in lieu of their disposal or destruction, by giving the notifyingParty notice of its election at least 10 days prior to the expiration of the 30-dayperiod.


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9 MUTUAL WARRANTIES AND COVENANTS OF THEPARTIES

9.1 Warranties.

Each Party warrants to the other that:

9.1.1 It is duly formed, validly existing and in good standing under the laws of[country of Developer entity] and is qualified to do business in [country where Facility is located] and has complied with all applicable laws;

9.1.2 It has full power to carry on business and to enter into, legally bind it by, andperform its obligations under this Agreement;

9.1.3 The signatories to this Agreement on its behalf are duly authorized andcompetent to execute and deliver this Agreement as being valid and legallybinding on it;

9.1.4 The execution, delivery, and performance of this Agreement, subject to thegranting and maintenance of the Relevant Consents, does not, and will not,constitute a violation of any legal or contractual constraint validly applied toDeveloper.

9.1.5 There are, to the best of its knowledge, no existing or threatened legal,contractual, or financial matters of any kind that could reasonably be expectedto affect materially either its ability to perform its obligations under thisAgreement or the enforceability of this Agreement; and

9.1.6 No information given by it in relation to this Agreement contains any materialmisstatement of fact or omits to state a fact that would be materially adverseto the enforcement of the rights and remedies of the other Party.

9.2 Developer Covenants.

Developer hereby covenants as follows:

9.2.1 During the term of this Agreement, the Developer shall design, finance,construct, own, operate and maintain the Facility in accordance with (a) thisAgreement, (b) its applicable Schedules, (c) sound engineering andconstruction practices and Prudent Utility Practice, (d) the operatingprocedures developed pursuant to Article 8, (e) all laws, rules, regulations and

ordinances that are enforceable or binding upon Developer (f) theenvironmental guidelines and occupational health and safety standards of[Host Country], 19 (g) such requirements as Utility may reasonably deemnecessary in order for the Interconnection Facilities to be designed andconstructed in accordance with sound engineering and construction practicesand Prudent Utility Practice;

9.2.2 the Facility will be designed, constructed and completed (a) in a good andworkmanlike manner, only with materials and equipment that are new, utility


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grade and suitable for their intended use; (b) in such a manner as to providethat the useful life of the Facility, with proper operation and maintenance, willbe at least equal to [__________] years; and (c) in accordance in all materialrespects with sound engineering and construction practices and PrudentUtility Practice;

9.2.3 Developer shall successfully complete the test operations required bySchedule 4 (Commissioning Requirements) for the Facility on or before theRequired Commercial Operations Date;

9.2.4 Developer shall notify Utility in writing of all apparatus that is from time totime included in Developer's Facility installations and that is likely to causeundue disturbance of Utility's system. Such apparatus shall be utilized onlywith the approval of, and as specified by, Utility, in writing. Such approvalshall not constitute a Utility any warranty or representation and shall notoperate to increase the liability of Utility with respect to third parties.

9.2.5 Where approval is granted pursuant to Article 9.2.4 above, Developer shall

use all reasonable efforts to prevent any apparatus being utilized in such amanner as to cause any undue disturbance of Utility' system. If Utility findsthat any such apparatus is being utilized in a manner that causes suchdisturbance, Developer shall, upon receiving notice of such finding fromUtility, immediately cease to so utilize such apparatus until steps have beentaken to the reasonable satisfaction of Utility to eliminate such disturbance;alternatively, Developer shall replace such apparatus by other apparatusapproved by Utility. In cases of emergency, oral notice will suffice for thepurposes of this Article, provided that such oral notice shall be confirmed inwriting within 48 hours of being given to Developer.

9.3 Utility Covenants.

9.3.1 Utility covenants to make the payments for Net Energy Output as required bythis Agreement as they become due without setoff against the amountspursuant to Schedule 2 for delivered electrical energy.

9.3.2 Where Utility must approve or Utility and Developer jointly must establishspecifications for connections of the Facility and related apparatus, Utilitycovenants to act reasonably in so doing, with the objective of coordinatingFacility and Utilitys Grid operations so as to maximize the Net Energy Outputof the Facility.

9.3.3 Shall operate and maintain its transmission system to the satisfaction of theDeveloper in accordance with Prudent Operating Practices so as not to haveaerial adverse effect on the Facility


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10 DEFAULTS AND TERMINATION

10.1 Developer Events of Default

Each of the following events shall be events of default by the Developer (each a DeveloperEvent of Default), which, if not cured within the time permitted (if any) under Article 10.3,

shall give rise to the right on the part of Utility to terminate this Agreement pursuant to Article10.4; provided, however, that no such event shall be a Developer Event of Default hereunderif (a) it results from a breach by Utility of this Agreement or (b) if it occurs as a result of aForce Majeure for the period provided pursuant to Article 11.4:

10.1.1 Abandonment of construction of the Facility by the Developer after thecommencement of Construction, without the written consent of Utility

10.1.2 Failure of Developer to achieve the requirements for the CommercialOperations Date [_____] after the Required Commercial Operations Date.Unless, prior to the expiration of such [_____] period, Utility and Developer

agree on the length, and terms and conditions of an extension of theRequired Commercial Operations Date, at the expiration of the [_____] yearperiod Utility shall either declare a default or waive its right to declare adefault pursuant to this Article. Utility may waive its right to demandpayment of the liquidated damages determined in accordance with theliquidated damages provisions of Schedule 2 (Calculation of Payments).

10.1.3 Willful alteration or tampering by Developer or its employees or agents of theInterconnection Facilities without the prior written consent of Utility, except insituations where such actions are taken to prevent immediate injury, death,or property damage and the Developer uses its best efforts to provide Utilitywith advance notice of the need for such actions.

10.1.4 Abandonment of operation of the Facility by the Developer after theCommercial Operations Date, without the written consent of Utility 20 .

10.1.5 Any failure by the Developer to make any payment or payments required tobe made by it under this Agreement within [___________] Days after theDeveloper is given notice that the payment was not made by the due date forpayment;

10.1.6 Except when taken for the purpose of merger or reorganization (providedthat such merger or reorganization does not affect the ability of the mergedor reorganized entity to perform its obligations under this Agreement), theoccurrence of any of the following events:

a) passage of a resolution by the shareholders of Developer for the windingup of Developer;

b) admission in writing by Developer of its inability generally to pay its debtsas they become due;


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c) appointment of a Liquidator in a proceeding for the winding up ofDeveloper after notice to Developer and due hearing; or

d) a court order to wind up Developer

10.1.9 Any material breach by Developer of any representation, warranty orcovenant in this Agreement.

10.2 Utility Defaults

Each of the following events shall be events of default by Utility (each a Utility Event ofDefault), which, if not cured within the time permitted (if any) under Article 10.3, shall giverise to the right on the part of the Developer to terminate this Agreement pursuant to Article10.4; provided, however, that no such event shall be a Utility Event of Default hereunder if(a) it results from a breach by the Developer of this Agreement or (b) if it occurs as a resultof a Force Majeure for the period provided pursuant to Article 11.4:

10.2.1 The occurrence of any of the following events, except where done for thepurpose of merger or reorganization that does not affect the ability of the

merged or reorganized entity, as the case may be, to perform its obligationsunder this Agreement:

a) passage of a resolution by the shareholders of Utility for the winding up ofUtility;

b) admission in writing by Utility of its inability generally to pay its debts asthey become due;

c) appointment of a Liquidator in a proceeding for the winding up of Utilityafter notice to Utility and due hearing; or

d) a court order to wind up Utility

10.2.2 Any failure by Utility to make any payment or payments required to be madeby it under this Agreement within [___________] Days after Utility is givennotice that the payment was not made by the due date for payment;

10.2.3 Wilful alteration or tampering by Utility or its employees or agents with theFacility or Interconnection Facilities without the prior written consent ofDeveloper, except in situations where such actions are taken to preventimmediate injury, death, or property damage and Utility uses its best efforts toprovide Developer with advance notice of the need for such actions

10.2.4 Any material breach by Utility of any representation, warranty or covenant inthis Agreement.

10.3 Notice and Cure

10.3.1 A Utility Notice of Default or a Developer Notice of Default shall specify inreasonable detail the Developer Event of Default or Utility Event of Default,respectively, giving rise to the Notice of Default. In the case of a default set


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forth in Article, 10.1, and 10.2, the defaulting party shall have [___________]Days ( i.e. , non-holiday weekdays) within which to cure the default.

10.3.2 Upon occurrence of an Event of Default that is not cured within the applicableperiod (if any) for cure, the non-defaulting Party may, at its option, initiatetermination of this Agreement by delivering a written notice (Notice ofDefault) of its intent to terminate this Agreement to the defaulting Party. Anotice of Default shall specify in reasonable detail the Event of Default givingrise to the Notice of Default

10.4 Rights and Remedies upon an Event of Default.

10.4.1 Developer Default . If a Developer Event of Default has occurred and theDeveloper Event of Default has not been cured within the period specified inArticle 10.3, Utility, in its sole discretion, may take any or all of the followingactions:

a) terminate this Agreement by delivering written notice to the Developer(Utility Termination Notice) or

b) proceed in accordance with Article 14 (Resolution of Disputes) toprotect and enforce its rights and to recover any damages to which itmay be entitled, including all costs and expenses reasonably incurred inthe exercise of its remedy, or

c) At its election, take such steps as are reasonably necessary to cure thedefault before so proceeding.

10.4.2 Utility Default. If a Utility Event of Default has occurred and the Utility Eventof Default has not been cured within the period specified in Article 10.3,

Developer, in its sole discretion, may take any or all of the following actions:d) terminate this Agreement by delivering written notice to the Utility

(Developer Termination Notice) or

e) proceed in accordance with Article 14 (Resolution of Disputes) toprotect and enforce its rights and to recover any damages to which itmay be entitled, including all costs and expenses reasonably incurred inthe exercise of its remedy, or

f) At its election, take such steps as are reasonably necessary to cure thedefault before so proceeding.

10.4.3 Notwithstanding the above, the total amount of damages that Developershall be entitled to for any breach of this Agreement by Utility shall notexceed, in the aggregate, the greater of the actual value of the remainingterm of the agreement and the fair market value of the payments for NetEnergy Output required over the remaining term of this Agreement.

10.5 Nature of Rights on Default.


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These rights and remedies shall not be exclusive but, to the extent permitted by law, shall becumulative and in addition to all other rights and remedies existing at law, in equity orotherwise. The Parties may seek to exercise such rights and remedies only in accordancewith the procedures set forth in Article 14 (Resolution of Disputes). The Parties mayexercise each right and remedy afforded by this agreement or by law from time to time andas often as reasonably deemed expedient by the Party exercising this right. No delay by, or

omission of, Developer or Utility to exercise any right or remedy arising upon any event ofdefault of the other Party shall impair any such right or remedy or constitute a waiver of suchevent or an acquiescence thereto.

10.6 Option to Purchase

If this Agreement terminates because of a Developer Event of Default pursuant to Article10.4.1, then Utility shall have an option to purchase the Facility (including materials, records,drawings and spare parts). The Parties shall within 14 days of the exercise by a Party of anOption agree to the appointment of a firm of international recognized auditors who shallundertake a due diligence of the Facility for the valuation.

10.7 Survival.

Notwithstanding anything to the contrary contained in this Agreement, where applicable therights and obligations set forth in this Article 10 shall survive the termination of thisAgreement.


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11 FORCE MAJEURE

11.1 Meaning of Force Majeure.

In this Agreement, "Force Majeure" means any event, circumstances, or combination ofevents or circumstances beyond the reasonable control of a Party that materially and

adversely affects the performance by that Party of its obligations or the enjoyment by thatParty of its rights under or pursuant to this Agreement, provided that such material andadverse effect has not occurred due to the failure of Developer or Utility to design, finance,construct, own, operate or maintain the Facility, Interconnection Facilities or the Utilitys Gridas required by this Agreement and in accordance with Good Utility Practice. Without limitingthe generality of the foregoing, and conditioned on performance of the requirements ofArticle 11.1.3, "Force Majeure" shall expressly include the following categories of events andcircumstances, to the extent that the events or circumstances satisfy the definitionalrequirements but is not limited to:

a) any act of war (whether declared or undeclared), invasion, armed conflict or act offoreign enemy, blockade, embargo, revolution, riot, insurrection, civil commotion,public disorder, act of terrorism, or similar events;

b) labor disputes, including strikes, works to rule or go-slow or lockouts, that are notlimited to disputes regarding wages, working conditions, and similar matters betweenthe Developer and its employees, but that extend beyond the Facility or arewidespread or nationwide or that are of a political, religious or ethnic nature;

c) action or inaction of any Public Sector Entity or Governmental Authority (includingexpropriation, nationalization or compulsory acquisition or acts claimed to be justifiedby executive necessity);

d) acts of God including lightning, fire, earthquakes, volcanic activity, floods, storms,cyclones, tornadoes or tsunamis;

e) epidemics or plagues;

f) fire, explosions, chemical or radioactive contamination

g) Delay in the delivery to the Developer of a major piece of machinery or equipmentthat has been timely ordered, but only to the extent that such delay is caused solelyby an accident in transportation or results directly from Force Majeure.

h) a nationwide shortage of Fuel that prevents the Fuel Supplier from providing

adequate deliveries of Fuel to the Facility;

i) accidents of navigation or breakdown or injury of vessels, accidents to harbors,docks or other assistances to or adjuncts of shipping or navigation, or quarantine,provided, however, that neither the lack of money or other inability to pay, norchanges in market conditions shall constitute a Force Majeure event.

11.2 Exclusion from Force Majeure.


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Force Majeure shall expressly not include the following conditions, except to the extent theyresult from an event or circumstances of Force Majeure:

a) unavailability, late delivery or changes in cost of plant, machinery, equipment,materials, spare parts, or consumables for the Facility;

b) a delay in the performance of any Contractor;

c) non-performance resulting from normal wear and tear typically experienced in powergeneration materials and equipment; and

d) Non-performance caused by, or connected with, the non-performing Party's (a)negligent or intentional acts, errors or omissions, (b) failure to comply with applicablelaws, or (c) breach of, or default under, this Agreement.

11.3.1 Notification and Obligation to Remedy

In the event of the occurrence of a Force Majeure that prevents a Party from performing itsobligations hereunder (other than an obligation to pay money), such Party shall: (a) notifywithin [_____________] days the other Party in writing of such Force Majeure; (b) not beentitled to suspend performance under this Agreement for any greater scope or longerduration than is required by the Force Majeure; (c) use all reasonable efforts to remedy itsinability to perform and to resume full performance hereunder as soon as practicable; (d)keep such other Party apprised of such efforts on a continuous basis; and (e) provide writtennotice of the resumption of performance hereunder. Notwithstanding the occurrence of aForce Majeure, the Parties shall perform their obligations under this Agreement to the extentthe performance of such obligations is not impeded by the Force Majeure.

11.4 Consequences of Force Majeure

11.4.1 Neither Party shall be responsible or liable for, or deemed in breach hereof

because of, any failure or delay in complying with its obligations under orpursuant to this Agreement which it cannot perform due solely to one or moreForce Majeure or its or their effects or by any combination thereof, and theperiods allowed for the performance by the Parties of such obligation(s) shallbe extended on a day-for-day basis for so long as one or more Force Majeurecontinues to affect materially and adversely the performance of such Party ofsuch obligation(s) under or pursuant to this Agreement; provided, however,that no relief shall be granted to the Party claiming Force Majeure pursuant tothis Article 11.4 to the extent that such failure or delay would havenevertheless been experienced by that Party had such Force Majeure notoccurred; and provided further, that the Party not claiming Force Majeure mayimmediately terminate this Agreement without further obligation if ForceMajeure delays a Party's performance for a period greater than (a)[___________] consecutive months prior to the Commercial Operations Dateor (b) [___________] consecutive months after the Commercial OperationsDate.


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11.4.2 During the pendency of an event of Force Majeure Developer shall not beentitled to receive Energy Payment from Utility except for energy alreadyreceived by Utility prior to the Event. If Force Majeure affects only part of theFacility, then Developer shall be entitled to receive Energy Payment forelectrical energy actually delivered to Utility.


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12 INDEMNIFICATION AND LIABILITY

12.1 Indemnity by Developer.

In addition to Developer's obligations and Utility's remedies provided elsewhere in thisAgreement, Developer shall indemnify Utility for any loss of or damage to property, death or

injury to person, and any other liabilities, damages, losses and reasonable costs andexpenses, including, but not limited to, legal fees and expert witness fees or any claimagainst Utility in respect thereof (collectively, Damages) suffered by Utility as a direct andforeseeable consequence of Developer's conduct, where Utility suffered Damages:

12.1.1 During the design, construction, ownership, operation or maintenance of theFacility and Damages resulted from any negligent act or omission ofDeveloper its servants or agents, and through no fault of Utility its servants oragents;

12.1.2 In connection with, arising out of, or resulting from, any breach of warranty,

material misrepresentation by Developer, or non-performance of any term,condition, covenant or obligation to be performed by Developer under thisAgreement; and

12.1.3 In connection with any claim, proceeding or action brought against Utilityunder any applicable national or local environmental laws or regulations, andDamages resulted from Developer's ownership of the site or operation of theFacility;

The Developer will hold Utility fully indemnified in respect of the foregoing losses, damages,death, injuries, liabilities, costs and expenses; provided, however, that the Developers

indemnities shall not extend to any loss, damage, death, injury, liability, costs or expenses(or any claim in respect thereof) to the extent that they were caused by any act or omissionof Utility or the failure of Utility to take reasonable steps in mitigation thereof.

12.2 Indemnity by Utility.

In addition to Utility' obligations and Developer's remedies provided elsewhere in thisAgreement, Utility shall indemnify Developer for Damages suffered by Developer, whereDeveloper suffered Damages:

12.2.1 During the design, financing, construction, ownership, operation ormaintenance of the Facility and its Interconnection Facilities and Damages

resulted from any negligent act or omission of Utility, its servants or agentsand through no fault of Developer, its servants or agents; and

12.2.2 In connection with, arising out of, or resulting from, any breach of warranty,any material misrepresentation by Utility or non-performance of any term,condition, covenant or obligation to be performed by Utility under thisAgreement.


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Utility will hold the Developer fully indemnified in respect of the foregoing losses, damages,death, injuries, liabilities, costs and expenses; provided, however, that Utilitys indemnitiesshall not extend to any loss, damage, death, injury, liability, cost or expense (or any claim inrespect thereof) to the extent that it was caused by any act or omission of the Developer orthe failure of the Developer to take reasonable steps in mitigation thereof

12.3 Notice of Proceedings.

Each Party shall promptly notify the other Party as soon as reasonably practicable after therelevant party becomes aware of any claim or proceeding with respect to which, but for theprovisions of Article 12.4, it is entitled to be indemnified under this Article.

12.4 Basket Limitation.

Neither Party shall be entitled to make any claim under this Article until such time as all suchclaims by the Party exceed [agreed amount] in the aggregate, or until such claim, if notmade, would be barred by the statute of limitation, at which time all such claims of that partymay be made. When aggregated claims in excess of [agreed amount] have been made,the same rule shall apply with respect to future claims.

12.5 Obligation to Defend.

Each Party on reasonable grounds shall have the right, but not the obligation, to contest,defend and litigate (and to retain legal advisers of its choice for that purpose) any claim,action, suit or proceeding by any third party brought against it, with respect to which theParty is entitled to be indemnified pursuant to this Article 12, with the Partys reasonablecosts and expenses of such action subject to said indemnity. The indemnifying Party shallbe entitled, at its option, to assume and control the defence of such claim, action, suit orproceeding at its expense and through legal advisers of its choice, if it (a) gives notice of itsintention to do so to the Party entitled to indemnification, b) acknowledges in writing itsobligation to indemnify that Party to the full extent provided by this Article 12, and (c)reimburses that Party for the reasonable costs and expenses previously incurred by it priorto the assumption of such defence by the indemnifying Party. Neither Party shall settle orcompromise any claim, action, suit or proceeding in respect of which it is entitled to beindemnified by the other Party without the prior written consent of the indemnifying Party,which consent shall not be unreasonably withheld.

12.6 Consequential loss

Neither Party shall be liable to the other Party under any theory of liability for anyconsequential or indirect damages, of any nature whatsoever, arising out of or in connectionwith the PPA, including loss of use, loss of revenue, loss of profit, loss of contract, loss ofgoodwill or any other loss or damage of an indirect or consequential nature suffered by theother Party.


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13 INSURANCE

13.1 Insurance Coverage.

At all times during the term of this Agreement, each Party shall obtain and maintain at itsown cost insurance coverage for the facilities relating to the Facility within its ownership

sufficient to indemnify that party or any successful claimant against loss or damage arisingwith respect to that facility. Such Insurance shall include the types of coverage usuallymaintained in respect of facilities of this kind.

13.2 Developer's insurance shall include, but not be limited to:

13.2.1 All Risks Marine Cargo Insurance in an amount sufficient to cover thereplacement cost of all plant and equipment shipped to and intended tobecome part of the Facility on a warehouse to warehouse basis.

13.2.2 All Risks (Property Damage) Operational Insurance in an amount sufficient tocover the replacement cost of the Facility, including construction equipment

and transit coverage for plant purchased within Host country and not subjectto the insurance described in Article 13.2.1 above and subject to deductiblesof no more than [___________] percent of the coverage amount in the caseof wind, flood and earthquake and [agreed amount] of the coverage amount inthe case of all other perils;

13.2.3 Excess Umbrella Liability Insurance with a single limit of at least [agreed amount] per occurrence.

13.2.4 Comprehensive or Commercial General Liability Insurance with bodily injuryand property damage limits of at least [agreed amount] per occurrence,

and in the aggregate, and subject to deductibles of no more than [agreed amount] .

13.3 Utility's insurance shall include, but not be limited to:

Utilitys coverage (or self-insurance with Developers consent), which consent shall not beunreasonably withheld) shall include, but not be limited to : [insert desired or negotiated coverages]

13.4 Endorsements.

Developer shall cause its insurers to amend such of its insurance policies as are applicablewith the endorsement terms set forth immediately below:

13.4.1 Utility, its directors, officers, and employees are additional insuredunder this policy

13.4.2 This insurance is primary with respect to the interest of Utility, itsdirectors, officers, and employees and any other insurance maintainedby them is excess and not contributory with this insurance


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13.4.3 The following Cross Liability Article is made a part of the policy:

In the event of claims being made by reason of (a) personal and orbodily injuries suffered by any employee or employees of one insuredhereunder for which another insured hereunder is or may be liable, or(b) damage to property belonging to any insured hereunder for whichanother insured is or may be liable, then this policy shall cover suchinsured against whom a claim is made or may be made in the samemanner as if separate policies have been issued to each insuredhereunder, except with respect to the limits of insurance";

13.4.4 Notwithstanding any provision of the policy this policy may not becancelled, renewed or materially changed by the insurer without giving[_______] days prior written notice to Utility. All other terms andconditions of the policy remain unchanged.

13.5 Use of Proceeds of All Risks/Operational Insurance.

The proceeds of any All Risks insurance obtained pursuant to Articles 13.2.1 and 13.2.2shall, be applied to the repair of the Facility.

13.6 Certificates of Insurance.

Each Party shall on request, cause its insurers or agents to provide the other Party withcertificates of insurance evidencing the insurance policies and endorsements required bythis Article 13. Failure to deliver certificates of insurance does not relieve the Party in defaultof the insurance requirements set forth herein. Failure to obtain the insurance coveragerequired by this Article 13 shall in no way relieve or limit the Party's obligations and liabilitiesunder other provisions of this Agreement.

13.7 Utility Option to Purchase.If Developer fails to obtain or maintain the policies of insurance as required in Article 13.4,Utility may obtain equivalent policies of insurance. Developer shall reimburse Utility for thecost of such policies within [________] days after notification by Utility and interest shallaccrue at the Default Rate if Developer fails to make payment within such [_____] days.Failure of Utility to obtain the insurance coverage required by this Article 13 shall in no wayrelieve or limit Developer's obligations and liabilities under other provisions of thisAgreement, provided that Developer's failure to purchase insurance shall not constitute adefault under this Agreement if Utility purchases insurance pursuant to this Article.


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14 RESOLUTION OF DISPUTES

14.1 Mutual Discussions.

If any dispute or difference of any kind whatsoever (a "Dispute") arises between the Partiesin connection with, or arising out of, this Agreement, the Parties within [____] days shall

attempt to settle such Dispute in the first instance by mutual discussions between Developerand Utility.

14.2 Arbitration

14.2.1 If the Dispute cannot be settled within [___ ] days by mutual discussions, thenthe Dispute shall be finally settled under the provisions of this Article 14.2.

4.2.2 Subject as hereinafter provided, any Dispute arising out of or in connectionwith, this Agreement and not settled by Article 14.1 may (regardless of thenature of the Dispute) be submitted by either Party to arbitration and finallysettled in accordance with UNCITRAL Rules of International Arbitration.

14.3 Continued Performance. During the pendency of any arbitration (a) Developer shallcontinue to perform its obligations under this Agreement to, among other things, provide NetEnergy Output; (b) Utility shall continue to pay all amounts when due, in accordance withArticle 4 (Currency, Payments and Billing); and (c) neither Party shall exercise any otherremedies hereunder arising by virtue of the matters in dispute.


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15 GOVERNING LAW

This Agreement and the rights and obligations of the Parties under or pursuant to thisAgreement shall be governed by and construed according to the laws of Host Country. 21


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16 NOTICES

16.1 Procedure for Giving Notice.

All notices or other communications (together "notices") to be given or made hereunder(including, but not limited to, account information for payments) shall be in writing, shall be

addressed for the attention of the person indicated in Article 15.2 below and shall either bedelivered personally or sent by prepaid post (with receipt acknowledgment required) or bytelex or by fax. Notices given by telex or fax shall be confirmed by a written copy of thenotice delivered or sent as prescribed in this Article. The failure to confirm shall not vitiateactual notice.

16.2 Addresses for Notices.

The addresses for service of Parties and their respective and fax number shall be:

1. For Utility:

Attention:

Address:

Fax No.:

Copied to:

2. For Developer:

Attention:

Address:

Fax No.:

Copied to:

A Party may modify its address information by notice provided as prescribed in this Article.The information shown above shall be deemed correct unless and until modified as providedherein.


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17 MISCELLANEOUS PROVISIONS

17.1 Variations in Writing.

All additions, amendments or variations to this Agreement shall be binding only if in writingand signed by duly authorized representatives of both Parties.

17.2 Entire Agreement.

This Agreement and its accompanying Schedules together represent the entireunderstanding between the Parties with respect to the subject matter of this Agreement andsupersede any or all previous agreements or arrangements (whether oral or written)between the Parties with respect to the Facility.

17.3 Waivers.

17.3.1 Limited Effect . No waiver by either Party of any default by the other in theperformance of any of the provisions of this Agreement shall: (a) operate orbe construed as a waiver of any other or further default whether of a like ordifferent character; or (b) be effective unless in writing duly executed by anauthorized representative of the non-defaulting Party.

17.3.2 Indulgences. The failure by either Party to insist on any occasion upon theperformance of the terms, conditions or provisions of this Agreement or timeor other indulgence granted by one Party to the other shall not thereby act asa waiver of such breach or acceptance of any variation.

17.4 Confidentiality

17.4.1 Treatment of Confidential Information.

( a) Each Party shall hold in confidence all documents and other information,whether technical or commercial, relating to the design, financing,construction, ownership, operation or maintenance of the Facility supplied to itby or on behalf of the other Party that is of a confidential nature and isdesignated as such. The Party receiving such documents or information shallnot publish or otherwise disclose them or use them for its own purposes(otherwise than as may be required by the Party, its professional advisers,potential lenders or investors to perform its obligations under this Agreement).

(b) The provisions of Article 17.4.1(a) above shall not apply to anyinformation:

that is or becomes available to the public other than by breach ofthis agreement;

that is in or comes into the possession of the receiving Party priorto the aforesaid publication or disclosure by the other Party andwas or is not obtained under any obligation of confidentiality;


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that was or is obtained from a third Party who is free to divulge thesame and was or is not obtained under any obligation ofconfidentiality; or

that is required by law or appropriate regulatory authorities to bedisclosed, provided that the Party supplying the information isnotified of any such requirement at least 5 business days prior tosuch disclosure and the disclosure is limited to the maximumextent possible.

17.4.2 Similar Provisions . For the avoidance of doubt, nothing herein containedshall preclude the use of provisions similar to those contained in thisAgreement or other referenced agreements in any agreements prepared andissued in connection with other Facilities.

17.5 Successors and Assigns.

Except where Developer assigns any of its rights to a principal lender whose existence has

been disclosed to Utility prior to the Commercial Operations Date, Developer may not assignor transfer its rights or obligations under, pursuant to or associated with this Agreementwithout the prior written consent of Utility, which consent shall not be unreasonably withheldor delayed. If Utility, on reasonable grounds, objects to the assignment of any ofDeveloper's rights to a principal lender, Utility shall (a) promptly notify Developer of itsobjection, specifying the reasons for the objection and (b) provide Developer a reasonableopportunity to affect a commercially reasonable cure to the objections. If Developer isunable to cure the objections, Utility may immediately terminate this Agreement. ThisAgreement shall inure to the benefit of, and be binding upon, the successors and permittedassignees of the Parties.

17.6 No Liability for Review.

No review or approval by a Party of any agreement, document, instrument, drawing,specification or design proposed by the other Party shall relieve the proposing Party fromany liability that it would otherwise have had for its negligence in the preparation of suchagreement, document, instrument, drawing, specification or design or from the failure tocomply with applicable laws with respect thereto, nor shall a Party be liable to the other Partyor any other person by reason of its review or approval of an agreement, document,instrument, drawing, specification or design of the other Party.

17.7 No Third Party Beneficiaries.

This Agreement is intended solely for the benefit of the Parties. Nothing in this Agreementshall be construed to create any duty to, standard of care with reference to, any liability to, orany right of suit or action in, any person not a Party to this Agreement.

17.8 Affirmation. 22 Developer declares and affirms that it has not paid nor has itundertaken to pay any commission, bribe, pay-off or kick-back and that it has not in anyother way or manner paid any sums, whether in currency of Host country or foreigncurrency and whether in Host country or abroad, or in any other manner given or offered to


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give any gifts and presents in Host country or abroad, to any person or Developer and,generally, has not made any payment or accepted any gift or in any way whatsoever acted inbreach of any obligation, prohibition or requirement of the Corruption Prevention Act, toprocure this Agreement. Developer undertakes not to engage in any of the said or similaracts during the term of, and relative to, this Agreement.

Utility declares and affirms that it has not paid nor has it undertaken to pay any commission,bribe, pay-off or kick-back and that it has not in any other way or manner paid any sums,whether in currency of Host country or foreign currency and whether in Host country orabroad, or in any other manner given or offered to give any gifts and presents in Hostcountry or abroad, to any person or Developer and generally, has not made any payment oraccepted any gift or in any way whatsoever acted in breach of any obligation, prohibition orrequirement of the Corruption Prevention Act, to procure this Agreement.

Utility undertakes not to engage in any of the said or similar acts during the term of, andrelative to, this Agreement.


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IN WITNESS WHEREOF , the undersigned have executed this Agreement as of the day,month and year first mentioned above.

Witness :

Signed for and on behalf of :

[Insert Legal Name of Developer ]

Witness :

Signed for and on behalf of :

[Insert Legal Name of Utility]


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18 SCHEDULES

Schedule 1- Defined Terms

Definitions : Whenever the following terms appear in this Agreement or the schedules

hereto, whether in the present, future or past tense, they shall have the meanings statedbelow unless the context otherwise requires

"Abandonment ": Either (a) the cessation of substantially all activities relating to theconstruction or operation and maintenance of the Facility, as appropriate, or (b) the physicalabsence, during a period when the Facility is not generating despite adequate renewableenergy resources, of substantially all technical employees of Developer and its contractorsfrom the site of the Facility in either case (a) or (b) for at least [____] consecutive hours. Thisdefinition does not apply in cases of Force Majeure.

Acceptance Tests : means all tests related to the acceptance of the Facility, as specified

in Schedule 3Agreement : This Power Purchase Agreement, including all Schedules thereto, asamended or supplemented from time to t ime.

Allowable Error : means allowable errors in the metering system according to Schedule 5(Metering)

Authorizations : any approval, consent, license, permit, authorization or other permissiongranted by a Governmental Authority, including Consents and the License;

Back-up Metering : means any electrical meters and metering devices installed, ownedand maintained by the Developer for backup purposes, used to measure the delivery of NetElectrical Output to Utility;

Base Rate : [DESCRIBE BASE INTEREST RATE]. Whenever the Base Rate is applied,the interest shall be compounded [_______], computed for the actual number of Dayselapsed on the basis of a 365-Day year.

Billing Period : means:

a) the period commencing on the Commercial Operation Date and ending on the lastday of the Calendar Month in which the Commercial Operation Date occurs; and

b) each subsequent period of one Calendar Month ending on or prior to the Termination

Date, provided that if the Termination Date occurs other than on the last date of aCalendar Month the final billing period will begin on the first day of the CalendarMonth in which the termination Date occurs and will end on the Termination Date.

Business Day : means a day (other than Saturday and Sunday or official public holiday) onwhich banks are open for business in Host country.


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Calendar Month : means a period of one calendar month beginning on the first day of suchcalendar month.

Calendar Year : means a Year beginning on 1 January and ending on 31 December of anysame year.

Change in Law : shall mean (a) the adoption, promulgation, change, repeal or modification

after the date of this Agreement of any applicable Legal Requirement (b) the imposition uponthe Developer, its Contractors, the Lenders, or a Fuel Supplier of any material condition inconnection with the issuance, renewal, extension, replacement or modification of anyAuthorization after the date of this Agreement that in either case (i) establishes newrequirements for the construction, financing, ownership, operation or maintenance of theFacility that are materially more restrictive than the most restrictive requirements in effect asof the Effective Date or (ii) has a material and adverse effect on the Developer, the Facility orthe return (net of tax) to the Investors of the Developer;

"Commercial Operations Date: The date on which the Facility actually and successfullycompletes the test operations required by Schedule 3 (Commissioning Requirements).

Commissioning : taking all steps necessary to put the Facility into operation includingcarrying out tests prior to operation

Construction Contract : The agreement to be entered by the Developer for the design,manufacture, construction and commissioning of the Facility

Construction Period : means the period from the date of start of construction to thedeclared Commercial Operation Date;

Confidential Information : is defined in Article 17.4;

Consents : All such approvals, consents, authorizations, grants or certificates of

registration, notifications, concessions, acknowledgments, agreements, licenses, permits,decisions or similar items required to be obtained from any Public Sector Entity or otherrelevant governmental entity for the Developer or for the construction, financing, ownership,operation and maintenance of the Facility 23

Contractor : any person with whom the Developer enters into an EPC Contract or anOperating and Maintenance Agreement and each such persons sub

CARILEC: Development of a Prototype Power Purchase Agreement and Training Programme, 12-2011

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Transcript of CARILEC: Development of a Prototype Power Purchase Agreement and Training Programme, 12-2011