SPONSORS OF LEGAL EAGLES
RENEWABLE ENERGY CONTRACTS A BRIEF OVERVIEW
Contracts for the provision of goods and services leading to the commissioning and maintenance of a renewable energy system, be that a wind turbine, hydro turbine, solar installation, Biomass system, etc all need careful consideration in terms of content and structure.
PROTECTION the final overriding Contract must protect the consultant from risk and reflect the factual process of leading into and procuring the project through feasibility, installation, commissioning and maintenance. On the other hand reasonable legal protection should be afforded to the client as regards correct duties of care for the services provided and correct warranties for the goods supplied, thus underpinning the provision of and performance of the system over time. Also, the documentation presented by the consultant should be as clear, concise and “user friendly” as possible.
INITIAL VISIT TO SITE AND INITIAL DISCUSSIONS • Outline Services – site assessment, measurement, planning application, outline of goods and services, initial return on investment ideas for parties, production of a report to lead to next phase
• Detailed Service – seasonal measures, specialist studies, detailed specification of goods and services, detailed performance specifications re downtime etc, dealing with planning conditions, details of project services and maintenance services, cash flow plan, production of a report to lead to next phase
• Project Services – all services to lead to installation and commissioning and for utility company and network operator involvement and takeover
• Maintenance Services – ongoing maintenance re cost in use relative to performance over time and avoidance of downtime etc
the above example is fairly basic and for illustrative purposes only, but, from this example, it is important to appreciate that each of these phases should give rise to a series of independent contracts working incrementally forward on the project and working in synchronisation with the Overriding Contract
These incremental phases need to be carefully worked through between the consultant and the client and all need to be subject to an Overriding Contract between consultant and client containing key clauses relating to sale of goods and provision of services with particular care as to...
TYPICAL PROJECT
Take a typical project for say, the provision of a wind or hydro turbine to a user like a farmer. In this process, one might reasonably expect a series of phases as follows...
• Any selection of goods or design service • Commissioning • Charges and payment, warranties as to goods supplied for the benefit of the client and any reasonable exclusion or reduction of liability clauses for the benefit of the consultant
• Financial arrangements including FIt sharing and return on investment formula after dealing with any domestic consumption of electricity by the client
• Grant of Lease and draft Specimen Lease • Maintenance • timing for completion of installation • planning and other statutory requirements
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www.windenergynetwork.co.uk
• provision of information between client and customer
• Delivery and risk transfer in the goods • Confidentiality and intellectual property • Llimitation or exclusion of liability as far as legally permitted
• Assignment and sub contracting • Force majeure i.e. unforeseen circumstances which may delay the project
• possible right for client to cancel contracts on consumer credit grounds
• other clauses
Most importantly the Overriding Contract must carefully regulate the progression of the above phases between the parties, by specifically controlling when the individual contracts for the individual phases arise and are concluded, so the parties are free and clear to deal, if they both wish to, and move onto the next phase.
SIMILARITIES TO CONSTRUCTION AND ENGINEERING CONTRACTS Renewable Energy Contracts are to a large degree similar to construction and engineering contracts in that properly drafted they should control the risk relative to the best outcome in time, quality and money. However, of major difference is the lead in and project planning phases which are rarely allowed for contractors to participate in (apart from quickly coming up with cost saving ideas and value engineering etc) on mainstream contracting and engineering projects.
one major similarity does exist between mainstream contracting and engineering projects and Renewables projects. In that the more timely, quality and detailed the information, worked up at the outset, relative to a detailed scope of services and goods for a clearly related price, the fewer claims, the fewer misunderstandings and the better the job.
Denison till have many years experience in drafting traditional engineering and construction contracts and have been involved in drafting and negotiating an increasing number of renewables contracts for wind turbines, hydro turbines and solar power installations.
Gareth Hevey, Denison Till
www.denisontill.com
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