Engineering Phase

Feasibility Study

A successful feasibility study will consider all of the major engineering elements in a congenration project. These elements include thermal use, electrical use, sizing of basic plant configuration, cogeneration cycles, regulatory considerations, project cost and project economics. Many successful congeneration feasibility studies employ sophisticated computer programs and usually include a verbal presentation to the prospective owners of the facility to summarize the results of the feasibility study.

Preliminary Engineering

Once the feasibility study has been completed and a decision has been made to fund the project, the preliminary engineering phase can then begin. In this preliminary engineering phase the following efforts are undertaken.

Conceptual Design — This effort involves the mass flow and heat balance diagrams and the process and instrumental drawings, (P&ID).

Once the P. and I.D.'s are complete and the project heat balance is determined, the major equipment on the project can be properly sized.

Prepurchased Specifications — After the equipment has been sized, specifications for prepurchased equipment can be prepared.

Request for Quotations — After the specifications are complete the engineer can advertise for quotations from major equipment vendors.

Award of Bids for Major Equipment — After the bids for the major equipment have been received and analyzed, then the awards can be made for the major cogeneration equipment.

Environmental Permitting

The next major engineering activity in the project management of a cogeneration facility is the Environmental Permitting.

This phase includes obtaining all of the permits required for the construction and operation of the facility.

These permits include the following:

— Air Quality Permits

— Environmental Permits

— Federal Energy Regulatory Commission (FERC) Permits Building Permits

During this phase of the work the engineer will assist the owner in obtaining required permits from the various regulatory agencies. The most crucial permit required is usually the air quality permit. Obtaining this permit can be a very complicated process depending on the particular requirements affecting the specific plant design. Federal Environmental Protection Agency (EPA), State EPA agencies, and the local air quality permitting districts are involved in this permitting strategy. This permitting involves federal and state laws, regulations and almost always requires a certain defined Best Available Control Technology (BACT) for the control of emissions. Since this is a very crucial phase in the project affecting design, the regulatory phase should be started very early in the project, since the time required can be a critical item.

Utility Interface

A critical element in the project management of the cogeneration facility is the proper interface with the local utility.

The Utility Interface will include the following items:

— Power Sales Agreements

— Utility protection considerations Electrical Utility Upgrades

Power Sales Agreements — Depending upon the particular utility involved and whether the cogeneration plant owner's strategy is to sell electrical energy and or capacity to the utility or at a minimum to interconnect with the utility, there are certain agreements that must be negotiated with the utility. The timing of these agreements also can be critical since the utility must be notified early on in the project, regarding the particular characteristics and location of the proposed cogeneration facility.

Utility Protection Considerations — The electrical utility companies are very concerned with the integrity of their electrical generating and distribution systems and have very specific requirements for cogeneration facilities if they are to interconnect with the utility's electrical distribution system. These requirements include the protection for both sides of the system, that is, the utility and the cogeneration, or generating, sides of the plant. When the cogeneration facility is above a certain size, most utilities require specific metering arrangements for gross and net generation and also require telemetering of the generating production of the cogeneration plant to a central utility control center.

Electrical Utility Upgrades — Another major concern is the possibility of utility upgrades to accept the power from the cogeneration facility. These upgrades are often required because of the location of the cogeneration plant and these upgrades require significant time and cost. The planning and construction of these electrical upgrades are often critical and therefore require attention by the project manager early in the process.

Gas, Fuel Supply to Plant — On the fuel side, if the cogeneration plant is to purchase gas fuel from the utility, often the fuel pressure required is higher than the utility has available in the local area. This will require either gas fuel compression at the site or arrangements for the utility to run a separate high-pressure gas service to the facility. This also requires time for the utility to plan and engineer such upgrades. There may also be a significant cost involved.

Detailed Engineering Design

The next significant phase of the project development is the detail engineering design. This engineering design will include the following design elements:

Mechanical

— Electrical

— Structural

— Architectural

— Instrumentation and Control

The final product of this detailed engineering design effort is the production of a complete project manual. This project manual will consist of the following components: all bidding documents; general conditions; all technical specifications; all plans of the various disciplines required to constitute a complete set of plans and specifications.

This project manual will be used to obtain construction estimates or bids for the construction effort and the installation of the cogen-eration equipment.

Design Review - When the detail design is complete the next crucial element is a design review. This design review should incorporate a review of the plans and specifications by qualified engineers in various disciplines. This design review would include the following elements:

— Coordination

— Review for omissions or duplications Constructability review

— Replaceability review

— Maintenance and operating review

— Budget review

CONSTRUCTION PHASE Bid Phase

Under this phase of the work the engineer will organize and execute the following construction efforts:

— Invitation of bids

— Review of bid proposal Award of bids

Construction Contracts

The construction contracts can be awarded through a prime contractor who will be responsible for all subcontractors or the engineer and owner can elect to award separate contracts for major divisions of the work, or the project can be constructed under a construction management contract. Whatever procedure is used for the construction contracts the engineer must be involved in the construction monitoring effort.

Construction Monitoring

This monitoring of the construction effort will include the following activities:

— Scheduling

— Coordination

Scheduling — The construction scheduling activities and format, which will vary with the size and complexity of the project, is critical and must be designed and maintained by the project manager.

Coordination — The coordination of a cogeneration project can be very complex. This activity will require major attention by the project manager.

Budget Control — The maintenance of the budget goals will be a constant activity of the project manager. During the construction phase this effort will be a crucial concern.

STARTUP AND TESTING PHASE General

The startup and testing phase of the cogeneration project depending on the size and complexity can be a very involved procedure. The elements involved in this procedure will include the following:

— The designation of testing requirements.

— Supervision of independent testing laboratories when used to perform equipment testing and certification.

— Supervision of electrical calibration by independent electrical service companies.

— Final approvals of the testing procedures and final acceptance.

The testing and acceptance procedures can involve significant time and planning and the employment of standard American Society of Mechanical Engineers (ASME) testing procedures for the mechanical elements of the construction of the cogeneration facility and the monitoring and testing of the electrical relay protection systems which are required both for the protection of the cogenera-tion plant and utility electrical distribution systems.

Controls

The final testing and commissioning of the instrumentation and control systems is very crucial to the final checkout of the cogenera-tion facility. This must be witnessed by the project manager or delegated to a commissioning specialist. Once the testing of the various components of the system is complete and all of the test reports are available, the project manager must review these testing reports and decide to accept or reject the various components of the system. Once the components are accepted and the final project demonstration is complete the project manager can then generate a certificate of final acceptance. When this certificate is produced, the contractors can be paid the final payments and/or retentions and the project can enter into the training and operating phase.

Training

Training of Operating and Maintenance Personnel — At this point the operating and maintenance personnel should receive the final training to operate and maintain the plant. Ideally, the senior operators and supervisors should be brought on board early in the construction phase, so that they are able to witness testing of the various components usually in the manufacturers' facilities and to witness the installation of the major equipment and begin to become familiar with this equipment. The regular classroom training of the senior operators can then begin during the startup phases of the work.

Operation and Maintenance Manuals — The project manager must decide if the overall project manuals are to be assembled by a subcontractor or whether this is to be performed by the general contractor, or by the project manager's staff. However, a total operating and maintenance manual must be assembled for the entire plant systems.

Operating and Maintenance Procedures — The project manager has the responsibility to develop operating and maintenance procedures for the plant. This plant should then be staffed with qualified, well trained professional operators and maintenance people who understand the procedures implemented by the project manager.

The plant is then ready for the shake down phase of the operation. This shake down phase could consist of several weeks to several months to get through the initial problems that present themselves in any complicated plant operation. It will be necessary for the project manager to remain available during this period to shepherd the project into a smooth operating phase.

CHECKLIST FOR MAJOR CONTRACTS FOR COGENERATION AND SMALL POWER PRODUCTION2

This checklist addresses the requirements that these contracts must meet for a successful, nonrecourse or project financing of a cogeneration project (where the lenders or leasing company look solely to the revenues of the project for the return of their capital). Due to this form of financing, the contracts must minimize the various risks and adverse consequences that might occur. These same considerations are applicable to projects financed on more conventional bases because if the risks are minimized, the likelihood of the project achieving its projected results and returns are enhanced.

2Major Contractsfor Cogeneration & Small Power Production by J.W. Pestle & E J. Schneidewind, presented at 9th World Energy Engineering Congress.

"Maintaining The Spread" The Interrelationship of The Fuel and Power Sales Contract

I. Project makes money on the spread between the cost of fuel and the price of energy sold.

A. The key is to protect the spread against

1. Electric/thermal revenue decline without corresponding fuel price decreases, and

2. Fuel price increases without corresponding electric/ thermal rate increases.

3. Declines due to poor heat rate/capacity factor (see below).

the spread is helped by factors such as:

A. A floor on energy rates, either

1. Absolute; or

2. Carried (if rate drops below floor, utility pays floor rate and shortfalls are later repaid to the utility with interest).

B. Consistent underlying economics (so as to prevent divergences):

1. For example, the electric rate is based on coal prices and the cogeneration plant is coal-fired.

2. The electric rate is based on gas prices and the cogenera-tion plant is gas-fired.

C. Financially strong fuel vendors

1. Who for this reason can absorb decreases in fuel prices below their cost of production, at least for a period of time.

D. Diversity in and actual alternate sources of supply

1. Spreads risk.

2. Project should have an express contractual right to go to alternate suppliers if existing suppliers cannot meet specified price and terms.

E. Use of true wastes or by-products where the use of the substance as fuel is a no cost (or cost reduction) item to the fuel supplier, rather than a revenue item

1. Wood

2. Bagasse

3. Municipal solid waste

4. Waste coal

F. Energy rate based on less volatile solid fuels

III. Specific mechanisms

A. Simple indexing—fuel price varies with electric price:

1. Either based on total electric price rate change (energy and capacity), or

2. Based on energy portion only.

B. Subordination of fuel payment to loan/lease payment and reserves:

1. Totally.

C. Suspense/tracking account:

1. Deferral of a portion of fuel payments, with or without interest, so as to maintain the spread in the event of revenue shortfall/decrease in energy rates below a specified level.

D. Profit and loss sharing with fuel vendor:

1. Equity interest.

2. Contractual.

IV. Fuel Purchase requirements: Must track actual plant operations

A. No or low minimum purchase requirements.

B. Purchase requirements are only those actually needed for actual operation.

1. Purchases decrease and increase as plant actually operates no matter what the cause is:

a. Mechanical failure.

b. Operator error.

c. Negligence by owner.

d. Intentional actions by owner (e.g., intentional shutdown of plant for financial reasons).

C. Purchase obligation ceases if plant stops operation.

V. Term of Fuel Supply contract

A. In comparison with

1. Power sales contract and

2. Term of primary financing

B. Absolute term of fuel contract

2. Market price projections for that term

"Getting the Btu's" The Fuel Purchase Contract

I. Fuel specification described in detail

A. Btu content

B. Moisture

D. Sulfur

E. Other

F. Remedies for noncompliance

1. Reject fuel.

2. Fuel supplier replaces with complying fuel.

3. Automatic fuel price adjustment to keep project economics constant.

Price

A. Price adjusted automatically to maintain project net revenues constant if there is a deviation from the fuel specification.

The project is buying useful btu's. The price should be on a per MMbtu basis (e.g., btu/lb).

2. Table or formula for other major variable factors, such as moisture content.

3. Specified remedies for deviation from environmental requirements (e.g., compliance coal fails to EPA specification).

B. The price should be a delivered price (seller of fuel to absorb any transportation price changes, up or down).

C. Price mechanisms have to correspond with power sales contract, as described above.

HI, Other provisions

A. Measurement of fuel to conform to specifications

1. Who does the measurement.

2. Sampling method

3. Specific standards for measurement (ASTM or equivalent)

B. Delivery means carefully specified

1. Type of railcar (rotary coupler or bottom dump)

2. Truck delivery standard specified (to meet dumper specification), if applicable

C. Extensive default and remedy provisions favorable to cogen-erator

D. Agreement to provide financial institutions with all data needed on seller of fuel that is necessary for a project financing

E. Term of contract to be short initial term with renewals at cogenerator's option. Allows cogenerator to switch if fuel delivery is unsatisfactory/market price should drop

F. Delivery schedule provisions:

1. "Look-ahead" notification of likely requirements for next several months.

2. Obligation on fuel supplier to maintain a specified minimum inventory of fuel at the cogeneration plant.

"Selling The Power" The Power Sales Contract

I. Power Sales Contract Goals:

A. High rates are only part of the goal.

B. Rates must be financeable —predictable with downside risks minimized.

1. Downward fluctuations minimized/prevented.

2. Risks of nonpayment removed.

3. Risks of rate change minimized/removed.

4. In summary-goal is a contract with complete assurance that the stated rate will be paid for all hours of operation for the life of the contract.

C. Typical type of solution for financeable projects.

1. Negotiated rate where upward fluctuations are traded to utility in return for removal of downward fluctuations. Results in a firm, fixed rate, often at a discount from projected rates.

(a) A high but fluctuating rate is thus discounted to a lower fixed rate.

(b) Avoided costs escalating (but not decreasing) at a percentage of full avoided cost escalation.

2. Resulting rate is ratepayer neutral or favorable.

D. Specific rate design matters.

Seasonal rates vs. flat rate year round.

2. Time of day rates (on-peak, intermediate peak, off-peak).

3. Utility fees for administering PURPA contracts.

4. Contract adders for pollution decrease.

E. Methodology: The contract should specifically spell out the precise methodology used to compute the rates so as to prevent future disputes/aid financeability.

F. Rate Security: Assurance that the contract as written will stay in effect for the life of the contract.

1. " Contract or ratev- Can the contract be revisited/reopened by the parties or by the Public Service Commission?

(a) Can PSC reopen contract even if the contract does not allow same/parties do not want it? If so, what are the standards?

(b) If allowed in the contract, under what circumstances and what are the standards?

2. Contract enforceable even if PURPA or state regulations changed/repealed (not a PURPA contract).

3. Pass through-utilities ability to pass through costs to the ratepayer.

(a) Express approval on this in advance very desirable

(b) PSC approval of contract in advance as just, reasonable, in the public interest and complying with PURPA.

(c) Can contract be reopened/unrecovered costs charged back to the project if the utility cannot pass through costs?

4. General language of force majeure clauses should not allow the contract to be opened under the preceding or other analogous circumstances.

5. Loss of QF status.

(a) Does the utility still have to purchase?

(b) If so, for how long (during any appeals; while the project has QF status restored)?

(d) Agreement to have contact approved as wholesale contact by FERC.

G. Curtailment: Minimize situations/hold project harmless in the event of utility inability/lack of requirement to purchase (transmission line de-energized or overloaded, system emergency, testing interconnect equipment, light loading).

1. Cap on number of hours per year when need not purchased.

2. Some/all of the rate (e.g., capacity payment) is paid during times of curtailment.

Interconnection: Interconnection requirements can be a major hurdle. Must be expressly dealt with in the power sales contract or related contracts.

A. What is required for interconnection?

1. Dual feeds to the utility's transmission system?

2. What is the point of connection to the utility's existing system-and thus length of needed transmission lines? Islanding issues (project and some customers cut-off from rest of utility grid):

(a) Does project continue to operate?

(b) Surge protection.

(c) Frequency maintenance.

(d) Voltage limits.

(e) Load following ability.

(f) Does this make the project a utility?

(g) How is billing handled?

4. Telemetry/telecommunications requirements: Is direct, secure, redundant telemetry and phone connection with utility dispatcher required?

5. Amount and types of other protective and safety equipment.

B. Provision and cost of interconnection equipment:

1. If provided by a private contractor, how to assure that the utility's standards for the interconnection equipment have been met?

2. If the utility supplies the interconnection equipment:

(a) Will its price meet the lowest competitive private bid?

(b) Will it commit to a fixed price, schedule and adequate delay damages for its provision of the interconnection equipment?

(c) Who resolves the above issues if the utility and project can't?

C. Is the project required only to pay for interconnection costs incurred at the time the installation is placed on line, or repair, replacement or additional interconnection costs in later years as well? If future costs are included are there any dollar limits on them?

D. Will transmission bottlenecks require payments by the project to removed the transmission bottleneck?

III. Indemnities/Non-interference Clauses:

A. Scope-where circumstances on the utility's sytem harm the project and vice versa.

B. Equivalence-are they truly a two-way street? Should they be?

C. Are the risks imposed on the project insurable (important for financing)?

D. Non-interference and indemnity can be quite important if there is a risk that islanding or the project tripping off line can lead to surges harming other customers, or if interferences on the company's system reduce the power factor, and thus the output, of the project.

IV. Station Power:

A. Will it be produced by the project or bought at retail?

B. How is this affected by the utility's retail demand ratchets and standby rates?

V. PSC Approval/Ratepayer Pass Through:

A. Is the power sales contract contingent on Public Service Commission approval? Even if not, does the contract (and will the utility) allow advance Public Service Commission approval?

1. Advance approval minimizes the risks of later rejection/ alteration of the contract by the Commission as imprudent or violating PURPA.

2. Approval aids financing, especially with a weak utility.

3. Utilities may oppose such approval as infringing on their management prerogatives or moving the Public Service Commission out of its reviewing role.

4. But approval may give the commission more ability to reopen the contract (against the cogenerator's wishes) later.

B. Must/can/will advance rulings be obtained from the State Commission on the ability of the utility to pass through all costs to its ratepayers?

1. Similar issues to number A above.

2. If obtained this minimizes one of the biggest risks for the utility and the project-that part way through the contract the utility cannot pass through its costs. This may result in the utility trying to alter the contract.

Other Issues:

A. No or minimal limits on project's ability to assign the contract are usually necessary for financing.

B- Billing and prompt (20-30 days) payment terms very help-ful-reduce working capital needs.

C. Contract term must be significantly longer than term of expected financing.

D. Default provisions must provide adequate notice and ability to cure.

E. Does the utility require an option to purchase at the end of the contract?

F. Dispatchability.

1. Does the utility desire/require this?

2. Can the project accommodate this?

G. Coordination of maintenance and planned outages between the utility and project.

H. Provision by the utility for emergency purchases from the project if project not already operating at full capacity.

1. Required by utility?

2. Provision for dumping excess thermal energy.

3. Effect on qualified facility status.

5. Telemetry/telephone notification.

I. Utility arrange/assist in wheeling power if project located in another utility's service territory.

"Building It to Work" The Design-Build Contract

I. Two Main Concepts:

A. Construction Phase: Strong contract provisions/assurances on the cost and schedule for completing the project.

1. Developer has only a limited amount of funds, and no more, with which to complete the plant and bring it on line.

B. Operation Phase: Strong contract provisions/assurances that the project will operate as planned—producing X kWh of electricity for sale per year while burning no more than Y amount of fuel.

1. Heat Rate: That if provided X tons of coal/Y mcf of the plant will produce at least a certain number of kWh of electricity.

2. The number of kWh of electricity actually generated per year is the product of rated output x capacity factor x 8,760. Requires assurances that:

(a) That the plant will have the rated output planned (e.g., at least a 25 MW plant), and

(b) That it will meet or exceed a specified capacity factor (e.g., 85%).

C. Implementing these concepts involves a combination of

1. Contractual performance standards and responsibilities on vendor and

2. Remedies, bonuses and penalties.

True Turn-Key Contract Approach

A. The vendor delivers a fully operable plant meeting the specified scope of work by a certain date for a certain amount of dollars.

B. Place total responsibility for bringing the project to completion on the vendor.

1. The contract is all inclusive on items which must be done to bring the plant to completion.

2. Few, if any, provisions in the contract for price increases or schedule changes.

3. Extremely limited force majeure clause (e.g., strikes do not excuse performance).

4. Construction contract is keyed to a general scope of work document ("A plant which will produce 25 MW with an 85% availability factor when provided with fuel meeting a certain specification") and not to a detailed design. The scope of work requires building a plant to a performance specification with general quality standards as opposed to a detailed design specification.

5. Responsibilities of the developer and owner minimized.

C. The results should be similar to the developer/owner buying an existing plant: Most or all of the risks of the construction phase (cost increases, schedule delays, not meeting specifications) are placed on the vendor.

D. Typical problem areas in allocating responsibilities/risks include:

1. Sub-surface/hidden conditions.

2. Obtaining and complying with permits.

3. Subsequent law changes.

4. Strikes (vendor or sub-supplier).

5. Utility interfaces.

III. Performance Test

A. Goals

1. To show compliance with contract standards; trigger penalties/remedies of non-compliance; lead to closeout of contract.

2. To provide substantial assurance to the owner/lender/ lessor that the plant will perform as intended for a long time.

B. To achieve these goals, have the performance test resemble reality.

1. Long duration.

(b) Two 30-day tests, six months apart.

2. Performed under actual operating conditions.

(a) Operators who will actually run the plant.

(b) No more than actual number of operators specified in operating manuals (no additional help).

(c) No special equipment.

(d) In accordance with all operation manuals, vendor instructions, warranty requirements and the like.

3. Comply with all environmental and other laws.

4. Vendor to perform the test when it believes shakedown is sufficiently complete.

5. Plant performance during test determines whether the contract is met, applicable bonuses and penalties.

C. Typically measure many plant parameters during the performance test, especially those relating to

1. Output level.

4. Emissions.

D. Detailed specifications on the performance test must be included in the contract covering such matters as:

1. Design conditions for the plant.

2. Method of correcting from actual test conditions to design conditions.

3. Condition of the plant at start and stop of test (inventories at various portions of the process).

4. How the plant will operate with respect to intermittent factors (cycling equipment and the like)

E. Instrumentation and measurement

What is measured?

2. By what instruments?

4. With what precision?

5. With what adjustments?

6. Record-keeping requirements.

F. Type of Reports/Data/Computations to be supplied to by Vendor.

General formulas to be used in computing key variables carefully spelled out.

IV. Remedies/Bonuses/Penalties

A. Goal. Penalty (and perhaps bonus) arrangement that holds project's over-all economics constant against the major project risks of delays and failure to perform as intended.

1. Reality. It may not be possible to obtain complete contractual protection on all points from the vendor.

2. The owner, interested third parties and/or financing institutions will likely have to take some of the residual risks in return for cash payments or expected future of return.

B. Schedule: Goal is a fixed completion date with delay damages equal to cost to owner of any delays after a specified date, such as:

1. Interest on construction loan

2. O & M costs (operators and equipment being paid for even though the plant is not generating revenues)

3. Loss of tax benefits due to delays.

C. Failure to Meet Performance Test Standards.

1. First and most important remedy is obligation of vendor to promptly fix plant to meet standards.

(a) Best for all parties and especially for owner/lender/ lessor as the monetary damages described below may not be sufficient to totally compensate all parties for failure to meet specifications.

(b) Dollar and time limits on vendor's reponsibility to reperform and correct problems are usually a major issue.

2. The secondary remedy is dollar penalties/liquidated damages for failure of the project to meet the performance tests standards.

(a) "Buy-down" of the plant so that the cost per kilowatt (cost/kW) is held constant if the rated output is not met for any reason, e.g.,

(i) Inability to produce output at contract level (20MW rather than 25MW plant)

(ii) Environmental constraints.

(b) Similar "buy-downs" if heat rate is higher than provided for/capacity factor is not met

(i) The reality is that the discounted present value of the lost income stream due to either of these factors is very large and there is a likely inability to get liquidated damages approximating this disaccounted present value.

(ii) Reinforces the need for a conservative design and extensive first obligation on the vendor to make the plant work.

D. Bonuses for project exceeding specifications.

1. Desired by vendor but risky for the owner due to the vendor's ability to "skew" matters to achieve some bonus whereas the actual plant may not be deserving of same.

2. A likely intermediate position is a partial bonus determined based in part on the performance test and part on the actual operating characteristics over time.

V. Many other factors to be covered in the contract

A. Detailed warranty provisions.

1. Scope

2. Duration (several years on major equipment)

3. Wrap around by main vendor

B. Limitations on liability

C. Owner's rights

1. Review and comment.

2. Receive data

3. Participate in meeting/negotiations

4. Observe inspections.

D. Coordination and priority among design contract documents.

E. Clear specification of external interfaces to be met

Raw water qualities

2. Air discharge

3. Water discharge.

4. Electric utility interface.

5. Gas utility interface.

"Interfaces and Consistency" Making Sure The Contracts Meet And Match

I. Financing/Legal Perspective

A. The project is a "paper project" where the contract package represents the project. All the contracts must fit together perfectly and be consistent with no over-laps and no gaps on all matters materials to the project.

1. If the contract package, scopes of work, assumptions, interfaces and the like in the various documents are not all consistent or do not match, there is a significant risk that the project will not be completed or operated as planned.

B. Solution: Structure the project from the start for consistency, no overlaps, no gaps; and at the appropriate time (neither too early nor too late) the developer, lawyer and engineer must carefully review the entire document package for consistency and gaps.

II. Typical Issues.

A. Fuel Contract and Design Build Contract: Consistency between the two on

1. Fuel specification

2. Delivery method

3. Schedule for deliveries.

B. Power Sales Contract and Design Build Contract.

1. Usually complicated issues as to who does what on connecting plant to utility grid.

(a) Standards

(b) Timing

(c) Respective roles of the parties on review/comment; approval; construction and cost responsibility.

(d) Typically applicable to

(i) Meters

(ii) Line to utility grid Transformers

(iv) Relays

(v) Disconnects and the like

2. Typical example: Is the project output metered on the high side or low side of the output transformer? If on the high side, have the transformer losses been included in the performance standards for the plant?

3. Power Delivery Characteristics

(a) Wave forms

(b) Frequency Limits

(c) Nominal voltage and ability to increase/decrease same within utility's scheduled limits for same.

(d) Reactive supply and ability to make power factor leading/lagging within utility's scheduled limits.

C. Design-Build Contract and Its Attachments.

1. Reluctance on the part of lawyers to examine the scope of work, general technical requirements, performance, test documents, design documents and the like. Similar reluctance by technical experts to examine legal documents.

2. Each must examine the other's documents in detail. Typically find actual/potential inconsistencies or am biguities which should be resolved at the time, not later via a conflict/priority of document provision.

D. Correspondence of Design Build Contract With External Environment.

1. Raw water characteristics.

2. Air permit requirements.

3. Water permit requirements.

4. Easements and rights-of-way.

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