Engineering, Purchasing, and Construction
Because large solar energy systems can potentially cost tens of millions of dollars, EPC contracts should be carefully prepared and negotiated to precisely define each party’s expectations and responsibilities.
Energy Control
The point at which a private individual or entity generating solar electricity becomes a regulated utility may be determined by whether such an individual or entity uses the power it generates, sells it to third parties under a PPA, or sells power to the general public via the grid. These questions can be jurisdiction-specific, so it’s critical for a solar power provider to analyze and resolve these and other related regulatory issues early on. Similarly, physically connecting a solar project to an energy customer’s electrical infrastructure or the grid can be highly regulated, and all parties involved must understand the regulatory framework, RTO interconnection standards, and local public utility requirements.
Renewable Energy Credits (RECs) If you wish to use a REC to meet above-code criteria, such as for LEED-certified green building projects, you must ensure compliance with those program requirements. Monetizing REC values, like any other commodity, can necessitate both commercial and legal skills.
Risk Distribution
Failure of a solar energy system to function as projected can have substantial economic consequences, and promised cost savings can quickly disappear. Furthermore, if the governmental programs or incentives that drive the REC market are changed or eliminated, the anticipated financial gains may not be realized. While these and other versions of operational and regulatory risk cannot be completely eradicated, informed solar sector participants should recognize and evaluate such risks, contractually allocate them appropriately, and endeavor to guarantee that deal pricing accurately reflects such allocation.
Owners of operations and maintenance systems may attempt to hire a third-party contractor to undertake operations and maintenance. The owner’s financial models should account for the continuous costs of such services. Furthermore, maintenance obligations should be considered while allocating operational risks.
Market Situation
The growth of solar energy and regulatory policies are inextricably intertwined. Counsel can help by maintaining current on developments in the solar sector as well as in legislative and regulatory realms. As conditions change, lawyers can assist in providing advice on the potential effects on solar installations. This can be a critical aspect in establishing credible projections about the solar market’s future and maximizing prospects for solar success.