Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 235
Offshore Wind Worldwide 2023
date. For RE plants not covered by the FiT
program, the RE developer and DU may
negotiate on the duration of the bilateral
PSA. If the offtake agreement was entered
into pursuant to the GEAP, the contract term
shall be for a period of 20 years. Generally, an
offtake agreement between an RE developer
and a DU has a take or pay provision. As a
result of the COVID-19 lockdown and extended economic disruption, some DUs are
now being required to pay for unused power
due to take or pay provisions in their PSAs. 58
An offtake agreement between an RE
developer and a contestable customer is
governed by Retail Competition and Open
Access (RCOA) and the GEOP. The RCOA is
mandated by the Electric Power Industry
Reform Act of 2001 (EPIRA), which allows
contestable customers to decide which
retail electricity supplier to source electricity from. Currently, any customer with an
average peak demand of at least 500kW for
the past 12 months qualifies for the RCOA.
For GEOP, a customer with an average peak
demand of at least 100kW for the past 12
months qualifies for the GEOP.
It is possible that a customer may qualify
for both. In such a case, it may choose to
deal with any retail electricity supplier or RE
supplier. Under both programs, the contestable customer and the RE developer are
allowed to negotiate their PSA, including the
purchase price for the electricity generated.
These agreements are not subject to any
price regulation or review by the ERC. No-
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wadays, retail electricity suppliers, including
RE suppliers, do not incorporate take or pay
provisions in their PSAs in order to be more
competitive and to be more flexible to the
contestable customer. The typical duration
of retail PSAs with contestable customers
range from 2 to 5 years.
4.2 Consequences of project delay
The consequences of project delay typically
depend on the terms and conditions of the
governing contract between the parties.
When a PSA is involved, the consequences
generally depend on the provisions contained therein. Force majeure is generally
recognized as an exception to compliance
with obligations under a PSA.
With respect to the RESA, under a template
OSWESC, the DOE is given the power to
terminate the RE contract when the RE developer fails to comply with the approved work
program, which necessarily includes the
timely completion of project. However, the
template also considers that non-compliance with the work program may be caused
by force majeure. In such a case, the RE developer’s obligation may be suspended for 1
year or until the force majeure event ceases
to exist, whichever comes earlier. Any failure
or delay on the part of the RE developer in
the performance of its obligations or duties
shall be excused to the extent attributable
to force majeure.
4.3 Examples of actual and future tariffs
Under the FiT program, all eligible RE plants
58 UKAID, Analysing Energy Transition Risk in the Philippines, available at https://icsc.ngo/wp-content/uploads/2021/08/KEEP_Analysing_Energy_Transition_Risk_PH_Power_Sector_April21_Final.pdf (last accessed March 1, 2023).
