We all know that going through any kind of contracts can be neck breaking and tedious. But before you invest in an up and running solar power plant, you really are better off reading( if possible re-reading) the contract of agreement between the current developer and the installer.
While we might not be in a position to clarify all the commercial and legal aspects in this post, we can give you several guidelines (rather questions you must know answers to) to follow regarding the agreement. After you are done reading the agreement, you should have a fairly clear idea on the following aspects. Do not hesitate to check with the installer or developer, in the case of any further clarifications you may require. They are bound to provide you with the same.
Now, what are those questions you need to know answers to?
- Who is responsible for the claims management in the power plant? For e.g., in the case of a large-scale power plant under the sale to utility model, will the installer be responsible to send the generation data to the substation or nodal agency, based on which the returns are obtained?
- What are the force majeure clauses (forces and consequences that are not within the control of human beings) provided for in the contract? Are they reasonable?
- Who will be responsible for the approvals required from the government, if any? Now, in this context do not forget to check if there are any approvals or subsidies to be claimed from the government.
- Who is responsible for any pending constructional work involved in the power plant? Are there any penalty clauses attached to delay in construction?
- Have all the invoices, with regard to the purchase made for of the plant, been transferred to the owner?
- Have a rough estimate of the power and water requirements for the maintenance of the plant covered in the context? In this regard, does the O&M agreement include expenses for auxiliary water and power needs?
- What are the grants and accesses allowed to the installer or the O&M team?
- What are the penalty clauses associated with delayed payments to the O&M contractor? Also do check on whether there are any pending payments to be made to the installer, in case the installer and the chosen O&M contract are different.
- Are the insurance papers and ownership transferred to the current developer? What were the insurance clauses?
- Have all the licenses for software like SCADA and other monitoring solutions transferred to the current developer?
- Where are all the documents related to technical specifications of components, warranty documents, and construction related drawings stored?
- Who are the key personnel from the component suppliers with whom warranty claims can be taken up and enforced in a timely manner?
You might want to check out these questions on Solar Power Plant Evaluation – Terms and Conditions
- How reputed are the solar power plants installers/EPCs? – Here
- What are the government policies applicable to the power plant? How/will this impact the returns from the power plant?-Here