A seller will not be entitled to claim relief if a delay in connection of a facility to the grid (defined as a System Event in the power purchase agreement) prevents it from generating energy during the early operating period.
On 14 June 2014, the Department of Energy (DoE) released the revised power purchase agreement (PPA) for Round 4 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). On 10 July 2014, the DoE released the revised PPA for the projects involved in Round 3 of the REIPPPP. Some of the most significant changes to each PPA appear to have been made in response to the experience gleaned by Eskom and the DoE during the commissioning and connection of Round 1 and 2 projects, in particular, delays in connection of a facility to the grid.
The amendments to the Round 3 and 4 PPAs include a new clause that excludes any claims for relief as a result of a System Event that occurs prior to the scheduled date for commercial operation.
Previously, the drafting of the clause dealing with System Events in the PPA was contradictory. Provided certain conditions were met, a seller under the PPA was entitled to claim relief from the buyer if a System Event delayed the date of commercial operation of the facility beyond the scheduled date for commercial operation. On the other hand a seller under the PPA was entitled to claim relief from the buyer if the System Event occurred in any contract year. A contract year is defined to begin on the first day of the early operating period, which can be up to 180 days prior to the scheduled date for commercial operation. This meant that some Round 1 and 2 projects found themselves at loggerheads with Eskom as to whether they were entitled to claim relief if the delay in connection occurred during the early operating period (i.e. in a contract year), but did not necessarily cause the date of commercial operation of the facility to be extended beyond the scheduled date for commercial operation.
The amendments to the Round 3 and 4 PPAs include a new clause that excludes any claims for relief as a result of a System Event that occurs prior to the scheduled date for commercial operation. Existing clauses have been amended to clarify that, provided certain conditions are met, sellers can only claim relief in respect of a System Event that has endured:
- in the period during which the date of commercial operation of the facility is delayed beyond the scheduled date for commercial operation; or
- after the date of commercial operation in any contract year.
