Chapter 10
Business: Legal considerations
of solar development
Jeffery R. Atkin and William DuFour III
This chapter is intended to provide the reader with a general background of certain
legal terms and key documents commonly used in the development of solar energy
projects. This chapter is divided into the following three sections: (I) Entering Into
Business Negotiations, (II) Business/Deal Structuring Decisions, and (III) Project
Development Considerations. However, these sections are not necessarily sequential.
In other words, some of the points made in all three sections will be relevant in most,
if not all, stages of project development.
The contents of this chapter are not meant to replace the use of legal counsel;
rather, we intend to help the reader identify and understand important deal points and
common considerations in the documents described within this chapter. In practice,
the “key terms” sections should be used as checklists (or cheat sheets) when reviewing
certain documents. All to say: this chapter is not meant to be a comprehensive review
of the agreements described, but is meant to provide practical considerations that the
reader should have in mind when reviewing various documentation. With that said,
every project developer should consider engaging experienced counsel throughout
project development because expertise is required in the following areas: real estate;
environmental and siting; partnership structures; Securities and Exchange Commis-
sion (SEC) controls, as they relate to holding companies; Federal Energy Regulatory
Commission (FERC) regulation; state regulatory authority energy regulation; utility
contracts, including power purchase agreements, operation and maintenance agree-
ments, and interconnection agreements; construction contracts; project financing; tax
issues; and evolving market trends.
10.1 ENTERING INTO BUSINESS NEGOTIATIONS
A project developer will enter into business discussions with various parties throughout
the stages of project development. Two common documents that may be important to
some or all of these discussions are:
1) a confidentiality agreement, in which the parties agree to keep certain informa-
tion confidential, and
2) a term sheet, in which the parties outline the agreed upon deal points that will be
central to their later agreement.
FONGTIPP_Book.indb 171FONGTIPP_Book.indb 171 11/12/2012 2:26:56 PM11/12/2012 2:26:56 PM

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