Project Development in the Solar Industry

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.

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