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Contract Management

EMP @ LUMS - Module II

Sep 11-14, 2018
Asad Ullah Ch.
Learning Outcomes
• To understand the concepts and definitions of the contracts EPA/PPAs
• To understand the commercial provisions of the PPA/EPA
• To understand the invoicing and power purchase tariff structure
• Be able to understand the financial framework of existing electricity
• Be able to understand the Power Project risk and risk allocation between
the parties

Content List
1. Concepts and definitions
2. Commercial Provisions of EPA-QASP
3. Effective Date, Term of Agreement
4. Sale and Purchase of Energy
5. Construction of the Complex
6. Control and Operation of the Complex
7. Interconnection and Metering
8. Compensation Billing and Payment
9. Project Cost and Financing Structure

Content List
10. PPA Invoicing and Payment Provisions (two part tariff)
11. Dispute Resolution
12. Electricity Market Financial Framework
13. Electricity Market Risk Analysis

EPA Concepts and Definitions

EPA Concepts and Definitions
 Recitals
• Also known as "WHEREAS clauses” of a contract that precede the main text
of a contract. Recitals describe the general idea and background of the contract
• what the contract is about?
• who the parties are?
• why they are signing the contract?
• Now, THEREFORE, parties hereby agree as follows:

EPA Concepts and Definitions
• Complex
• The electric power generation facility comprising
• Arrays of solar photo-voltaic modules located at the Site and
• The Seller Interconnection Facilities
• Contract Capacity
• The rated capacity of the Complex in MW which the Seller commits to install
and operate at the Site under this Agreement
• 100 MW
• Degradation
• The progressive degradation of the photovoltaic conversion efficiency of the
solar cells resulting in reduction of capacity of producing Energy

EPA Concepts and Definitions
• Commissioned
• The successful completion of Commissioning of the Complex for operation
synchronous with the Grid System
• Commercial Operations Date (COD)
• The Day immediately following the date on which the Complex is Commissioned
• Agreement Year
• A period of twelve (12) months commencing on anniversary of the COD and
ending on next anniversary of the COD
• An Agreement Year shall automatically be extended by the occurrence of an
Other Force Majeure Event (OFME) declared by the Seller

EPA Concepts and Definitions
• Ambient Site Conditions
• The climatic conditions at the plant site which affect the efficiency of the plant,
its generation and delivery of output including
• Solar irradiation
• Atmospheric temperature and
• Rainfall etc
• Non-Project Missed Volume (NPMV)
• The volume of electric energy (kWh) not delivered by the Complex due
• to constraints on
• or the unavailability of the Grid System
• Or gird failure or any fault in it
• or Dispatch Instruction
• Any other circumstances not caused by filure of the complex

EPA Concepts and Definitions
• Monthly Energy
• Sum of Net Delivered Energy & Non-Project Missed Volume
• Actual Annual Energy in a year
• Annual Benchmark Energy
• It is sum total of NEO (kWh) which the plant is capable of delivery to the national grid
during an agreement year
• Or Annual generation benchmark @17.5% plant factor
• 100 X 8760 X 17.5% = 153,300 MW
• Shortfall Energy
• Benchmark Energy - Actual Annual Energy (NDE+NPMV)
• Pre-COD Energy
• Energy delivered before COD

EPA Concepts and Definitions
• Business Day
• Any Day on which banks are legally permitted to be open for business in Lahore
and Islamabad, Pakistan
• Karachi Inter-Bank Offer Rate for Rupee deposits for a period equal to three (3)
• Delayed Payment Rate
• KIBOR plus two percent (2%) per annum
• Rate is applied for calculating interest on delayed payments by either of the party

EPA Concepts and Definitions
• Despatch
• the decrease, increase or cessation of the generation and delivery of Net
Delivered Energy to the National grid in response to Dispatch Instructions
issued from the System Operator
• Dispatch Instructions
• The original, successive or revised instructions for Dispatch of Energy issued by
the Purchaser/SO
• Dispute
• Any dispute or disagreement or difference arising under, out of, or in connection
with or relating to this Agreement,

EPA Concepts and Definitions
• EPA Direct Agreement
• An agreement between the Lenders, the Seller and the Purchaser pertaining to
rights and liabilities of the Lenders relating to this Agreement
• Implementation Agreement
• An Agreement between the GOP and the Seller in relation to the Project
describing the terms and conditions of GOP concessions and guarantees
• Guarantee
• The guarantee by the GOP of the payment obligations of the Purchaser under
this Agreement in the form of Schedule 3 to the Implementation Agreement.

EPA Concepts and Definitions
• EPC Contract
• The agreement between the Seller and the EPC Contractor for, inter alia, the
design, engineering, procurement, construction, completion, testing and
Commissioning of the Complex, as such agreement may, from time to time, be
amended by the parties thereto
• Interconnection Point
• The physical point or points where the Complex is connected with NTDC Grid

EPA Concepts and Definitions
• Maintenance Outage
• An interruption or reduction of the generation capability of the
Complex scheduled by the Seller in consultation with the Purchaser for
the purpose of performning work on specific components.
• Scheduled Outage
• A planned shut down of the Complex's generating capability
scheduled by the Seller in consultation with the System Operator
inspection for repair and maintenance or testing

EPA Concepts and Definitions
• Reference Tariff
• The reference rate for Net Delivered Energy expressed in Rupees per kWh
• Offered and approved by NEPRA
• Required Commercial Operations Date( RCOD)
• The last date by which the complex be ready for commercial operations after
• RCOD is 12 months after the Financial Closing date
• Rules of Interpretation
• Capitalized terms are those which have been defined in this agreement
• the singular includes the plural and vice versa
• schedules are part of the agreement

Article- 2

Effective Date, Term of Agreement

Effective Date, Term of Agreement

• Execution Date
• Date of signing of the contract
• Only following parts of the contract shall become effective
• Article I
• Section 2.1, 2.3
• (iv) Article XIII and XIX
• Effective Date or Financial Closing Date
• The date on which notice of financial closing is received by the Purchaser from
• Term of the Agreement
• 25 years from COD
• The term may be extended due to any Force Majeure Event (PPFME, CLFME)

Effective Date, Term of Agreement
• Financial Closing
• Execution and delivery of financing documents by the Seller and its acceptances
/notification by the AEDB on behalf of GOP
• Contract Capacity
• 100 MW Agreed
• Reduction in contract Capacity
• If the Seller reduces the installed capacity before COD, it shall pay a penalty of
US$ 350,000 per MW to the purchaser

Effective Date, Term of Agreement
• Operating Committee
• A joint committee of experts from the Purchaser and Seller
• Comprising of 3 members from each side
• Shall meet and decide various issues from time to time as per the operating
• Operating committee shall make its own procedures
• Sellers letter of credit
• LC issued by sellers bankers on its behalf
• It is a Guarantee of the sellers performance from
• Purchaser can en-cash the guarantee if the seller fails to perform with in RCOD

Article- 3

Sale and Purchase of Energy

• Purchase and Sale
• The seller shall sell and purchaser shall purchase
• Sale to other than Purchaser
• The Seller shall not, without the prior written consent of the Purchaser, sell to
any person other than the Purchaser
• Payment of Monthly Energy (Block-I)
• The payment @ 100 % of the tariff upto the Benchmark of 153,300,000 MW
• 100 MW *8760 Hrs. *1000*17.5% =153,300,000 MW
• Payment of Monthly Energy (Block-II) and above?

Article- 4

Construction of the Complex

Construction of the Complex
• Start and competition of construction
• The seller shall start construction immediately after the Effective Date.
• And completed by Required Commercial Operations Date (RCOD)
• The design must be in accordance with
• this Agreement,
• Specifications,
• the Laws of Pakistan,
• Prudent Utility Practices and Prudent Electrical Practices
• The Complex and all parts installed must be
• New and unused
• Comply with and satisfy the quality, design and safety standards of the IEC

Construction of the Complex Cont..
• Documents to be submitted by the Seller to the Purchaser on
before the specified dates:
• Copy of the Implementation (Effective Date)
• Constn1ction Reports (Quarterly)
• Completion certificate from the Engineer (On or before the COD)
• Copy of insurance policies (following the construction start date)
• copies of all results of the Commissioning Tests (within 30 days of the test)
• Copy of all the manufacturers' specifications and manufacturers operation
manuals (within 30 days of the test)
• copies of the Commissioning Tests results performed on the Complex and
certificate from the Engineer confining the results of each such test (within 30
days of the test)

Construction of the Complex Cont..
• Revised RCOD Notification by Seller
• The Seller shall notify the Purchaser promptly from time to time whenever it
determines that the then-expected date for Commissioning of the Complex is
unfeasible and shall specify a revised expected date
• Documents by the Purchaser
• The Purchaser shall provide the update of its construction work to the Seller
• Interconnection/transmission facilities, Metering System the Grid System
• Within 15 days of the request by the Seller
• Visits by the Purchaser
• The purchaser have right to visit the site and observe the progress of EPC 1he

Works and the Seller Interconnection Works and the operation of the Complex
• Seller shall facilitate the visit upon request by the Purchaser

Article- 5

Control and Operation of the Complex

Control and Operation of the Complex
• Operation of the Complex
• The Seller shall with all reasonable efforts opeate the complex with in
• Range of voltage specified in Grid Code
• Operating Procedures developed in accordance with Section 2.5
• The Technical Limits,
• Laws of Pakistan,
• The Grid Code,
• Prudent Utility Practices and the Prudent Electrical Practices
• O&M Contractor
• the Seller may contract with the O&M Contractor to operate and maintain the
• O&M by such Contractor shall be deemed to be that of the Seller

• Availability
• The Seller shall make the complex available for generation and delivery of
Energy Throughout the term of 25 years except during the following :
1) Force Majeure Event
2) Scheduled Outage
3) Maintenance Outage
4) Forced Outage
5) Partial Forced Outage
6) Non-Project Event

Article- 6


• Primary and Back up energy meters shall be installed
• Purchaser shall install primary metering system
• Seller shall install back up metering system
• Accuracy standard shall be more than one fifth of one percent (0.2%)
• Calibration, testing
• Joint Meter reading

Article- 7


• Both Seller and Purchaser shall install interconnection facilities
as per
• this Agreement;
• the Laws of Pakistan and the applicable Seller Consents;
• the Grid Code,
• the Generation Licence;
• Prudent Utility Practices and Prudent Electrical Practices; and
• Schedule 3 of this agreement

• Metering System
• The Purchaser shall procure and provide the Metering System to the Seller.
• If the purchaser fails then Seller shall procure and bill to the Purchaser
• The Seller, at its expense, shall install the Metering System and procure and install
the Back-Up Metering System
• Testing and Calibration
• The metering system shall be tested and caloberated at the time of installation
and subsequently from time to time as required by the EPA

• Tele Metering and Electronic Data Recording
• The Seller at its own cost shall install
1. Electronic data recording systems capable of recording the Net Delivered Energy
measured by the Metering System on a continuous basis for at least (90) Days.
2. The telemetry system to communicate all recording o the meters to NPCC
• Meter reading
• Physical meter reading through a joint mete reading committee
• If the Metering System is out of order then best available source including the
1. Back up meter reading
2. the telemetry system or
3. electronic data recording system of the
• Margin of error 0.2%

Article- 8

Testing of the Complex

Article- 9

Compensation Billing and Payment

QASP-Project Facts
• Name: Quaid e Azam Solar Power Pvt. Ltd.
• Sponsors Govt. of the Punjab
• Location: Bahawalpur
• Technology: Solar PV Cells
• COD achieved: July 15, 2015
• Capacity: 100 MW Gross
148,920,000 kWh per annum
• Annual Capacity Factor 17.5%

QASP-Project Facts
• Project Cost: Rs 15.3 Billion
• Financing Structure 75:25 (D/E)
• Debt Rs 11.48 B
• Equity Rs 3.83 B
• Annual Capacity 17.5% x 100 x 1000 x 365
153,300,000 kWh per annum
• Monthly Capacity 12,77,500 kWh per month
• Annual degradation 0.7% per annum

EPA Invoices –Solar

Energy Purchase Price

(EPP) Supplementary Charges

EPA Tariff

Energy Payment Tariff
• Energy Payment Tariff Covers
1. Return on Equity
2. Debt (Interest & Principle)
3. O&M
4. Insurance

Energy Payment Tariff
• Theory of Debt Tariff
• Concept of theoretical plant capacity
• Concept of actual expected plant capacity/basis of tariff setting
• Concept of IRR
• Concept of loan amortization schedule
• Annual funds required for debt servicing
• Debt Tariff
• Annual Capacity @17.5 % plant factor 1000 kWh
• Annual (Principle + Interest) repayment Rs 10,000
• Tariff per kWh =Rs 10,000/1000 kWh
=Rs 10 per kWh

Energy Payment Tariff Cont…
• Theory of Equity Tariff
• Concept of (%age) Guaranteed Return on Equity-Power policy
• Total Equity Investment –project cost
• Concept of actual expected plant capacity/basis of tariff setting
• ROE Tariff
• Annual Capacity @17.5 % plant factor 1000 kWh
• Return on Equity-Power policy 15%
• Project Cost Rs 100,000
• Total Equity Investment (25%) Rs 25,000

• Funds required as ROE @15% =25,000 X 15%

=Rs 3,750
• ROE Tariff = Rs 3,750/1000

Energy Payment Tariff Cont…
• Insurance Tariff
• Annual Insurance Premium Rs 500
• Insurance Tariff = Rs 500/1000
= Rs/0.50 per kWh
• O&M Tariff
• Estimated O&M Rs 2,000
• O&M Tariff = Rs 2,000/1000
= Rs/2 per kWh

Project Cost and Financing

Project Cost Project Financing

• Land cost • Debt *
• EPC • Equity**
• Duties and taxes
• Non EPC Cost
• Project Development cost
• Insurance during construction
• Interest during construction
• Financing fee and charges

Project Cost Structure
Cost Element Amount
(Billion Rupees)
EPC Cost 13,301
Taxes and Duties 244
Non- EPC Cost 457
Project Development Cost 385
Insurance during Construction 107
Total Capex 14,494
Interest During Construction 423
Financing Fee and Charges 399
Total Project Cost 15,316

Project Tariff Structure
Tariff Component Tariff Tariff Indexed Tariff
(1-10) (11-25) (Sep-18)
Rs/kWh Rs/kWh Rs/kWh
Return on Equity (Rs 3.83 B) 04.70 4.70 5.62
Loan and Interest (Rs 11.48 B) 11.97 0 11.92
Project Cost Tariff 16.67 4.70 17.54

Insurance actual actual actual

O&M 2.42 2.42 3.00
Total Tariff 19.09 7.12 20.54

PPA Invoicing and Payment Provisions
(two part tariff)
a case of
Nishat Power

PPA Invoices Thermal

Energy Purchase
Purchase Price Supplementary
(CPP) Charges


Theory of Capacity Tariff
• The Capacity Purchase Price (CPP) is a fixed payment that is paid each period
for each kilowatt of available (not dispatched) capacity It includes fixed charges
involved in the construction, operation, and maintenance of the power plant,
including charges for following Components of Capacity tariff
• Finance Cost
• Fixed O&M
• Working Capital Cost
• Insurance

Project Financing and Generation Tariff
• CPP Tariff is designed to ensure the
1. Recovery of project financing
• Repayment of debt*
• Return on equity**
2. Return of investment in working capital
3. Recovery of insurance cost
4. Recovery of fixed O&M cost
• EPP Tariff is designed to ensure the reimbursement of operating
1. Fuel cost
2. Operation & maintenance cost

Capacity invoices- billing and payments

Available Capacity Purchase
Capacity Tariff
∑(kW/h) (Rs/kW/h)

Capacity invoices- billing and payments

70,000,000 2 140,000,000
(kW/h) (Rs/kW/h) (Rs)

Capacity invoices- billing and payments
• Monthly Capacity (June-18)
• Kilowatts hours which a plant can generate during a month
• 100 (MW) X 720 (Hrs) X 1000 =72,000,000 (kWh)

• Advance CPP invoice (June-18)

• 72,000,000 (kWh) X 2 (Rs/kW/h) = Rs 144,000,000
• 144,000,000 X 70% = Rs 100,800,000
• Invoice date = on or after 1st day of June-18
• Final CPP Invoice (June-18)
• 70,000,000 (kWh) X 2 (Rs/kW/h) = Rs 140,000,000
• Less: advance already billed = Rs 100,800,000
• Final Invoice = Rs 39,200,000
• Invoice date = on or after 1st day of July-18

Capacity invoices- billing and payments
• Declared Available Capacity (70,000,000)
• Hourly Capacity is measured in terms of declaration by the generator
• Declaration is made 16 hours before the start of a day
• Declaration is made in respect of all 24 hours of that day
• With certain conditions, the Declaration can be revised upwards or downwards
within 4 hours before the start of that hour

Capacity invoices- billing and payments
• Dispatch
• Declaration is confirmed by Dispatch by the System Operator (NPCC)
• Dispatch instructions are given 7 hours prior to the beginning of the day and
• Dispatch instructions can be revised at a Notice of 5 to 30 minutes
• Inability to generate as per the Declaration/Dispatch instructions
• Results in deduction in capacity as well as
• Imposition of L.Ds

Theory of Energy Tariff
• The Energy Purchase Price (EPP) is paid each month for each
kilowatt hour of energy dispatched and delivered during that month. It
includes following Components of tariff
• Fuel Cost Component (FCC)
• VO&M
• Metering
• Electricity generated and delivered to the national grid (NEO) is measured
through Joint meter reading taken at the end of each month

Energy invoices- billing and payments

NEO Purchase
∑(kWh) Price

Energy invoices- billing and payments

60,000,000 10 600,000,000
(kWh) (Rs/kWh) (Rs)

Energy invoices- billing and payments
• Monthly Energy payment (June-18)

• Energy Payment = NEO (kWh) X EPP tariff

= 60,000,000 X 10
= Rs 600,000,000
• Invoice date = 1st of July 2018

Pass Through/Supplementary Invoices and Payments
• Supplementary Invoices
• Any cost, charges or taxes incurred by the Company pursuant to the laws of
Pakistan which under the PPA are reimbursed on actual basis
• Examples
• Excise Duty, GIDC
• Withholding tax on dividend
• Requirement
• Original payment evidence

Pass Through invoices- billing and payments

Actual Cost Invoice

incurred claimed
(Rs) (Rs)

Adjustment in Invoices
• Minimum Generation Benchmark and LDs
• Benchmark = Total capacity – outage allowances
• Seller LDS
• Purchaser LDS
• Power Curtailment and Compensation
• Purchaser's exclusive right to decide level of dispatch
• Curtailment Compensation-Thermal projects
• Temperature Correction
• Variation in the plant output due to site temperature at various hours in a day
• Hourly Temperature correction factor
• Applied on hourly CPP invoice as given in PPA schedule

Adjustment in Invoices Cont…
• Output Degradation
• Deterioration in performance due to plant depreciation over time
• Annual Output Degradation factor
• Applied on CPP invoices of the entire year as given in PPA Schedule
• Heat Rate Correction due to Part Load Operation
• Variation in output due to total load (Combined Cycle Thermal Machines)
• Hourly Part Load correction factor
• Applied on hourly EPP invoice, as per rate given in PPA Schedule
• Fuel Calorific Value
• Variation in output due to quality (calorific value) of fuel
• Revision in Fuel Cost Component (FCC) approved by NEPRA
• Part of EPP Invoice

Dispute Resolution

Arising of Dispute
• Dispute
• Any dispute or disagreement or difference arising under, out of, or in connection with or relating
to this Agreement
• A difference of whatsoever nature that arises between the parties pursuant to their mutual rights
and obligations under the PPA
• Arising of Dispute
• A dispute is created when a party gives a written Notice of Dispute to other party, stating the
reason , amount involved and reference to the EPA, etc.
• Reasons of disputes
• Grey areas in contracts
• Difference in interpretation of contractual provisions
• Jurisdiction of local courts
• Civil litigation
• Constitutional remedies
• Creation of Dispute by the Seller/Purchaser

Dispute Resolution
• Mutual Resolution by Parties
• the Parties shall attempt in good faith to settle such Dispute by mutual
discussions within thirty (30) Days after the date that the disputing Party delivers
written notice of the Dispute to the other Party.
• The 30 Days deadline can be extended with mutual consent of the parties
• Majority of the disputes are resolved at this stage
• If parties fail to resolve mutually then…..
• Expert Mediation
• Arbitration

Dispute Resolution Cont…
• Resolution by an Expert (Expert Mediation)
• The parties can engage an Expert and get its recommendation
• The Expert must be an independent person or entity
• The Expert is engaged with mutual consent
• If the parties fail to agree upon an expert in, the following shall be requested to
select the expert
• President ICAP for billing and financial disputes
• Vice Chancellor UET, LUMS, GIKI respectively for technical disputes
• Expert recommendation is not binding, unless otherwise agreed by the parties at
the time the Dispute is referred to the Expert
• There are certain time limitation to conclude recommendations by the expert (10
+ 15 days) but practically it can take years to conclude

Dispute Resolution Cont…
• Resolution by an Expert (Expert Mediation)
• the aggrieved party can proceed to the next step (i.e arbitration) with in 75 days
of the expert recommendation, otherwise the recommendation shall be final and
binding on the parties, and any right of the of further adjudication shall be
waived off
• if a Party does not accept the determination of the Expert or if the Expert has
not provided a determination within the time period specified, either Party may
initiate arbitration proceedings
• The costs of engaging an Expert shall be borne equally by the Parties

Dispute Resolution Cont…
• Resolution by an Arbitration
• A dispute can be referred for Arbitration to the London Court of
International Arbitration (LCIA) if
a. If it is not mutually resolved by the parties or
b. If it is not resolved by the Expert Determination or
c. Any of the party requires the dispute to be referred to arbitration without reference an
• The seat of arbitration shall be London, if
a. The amount of single dispute is above US$ 5,000,000 or
b. The amount of all disputes is above US$ 10,000,000
c. Otherwise, the seat shall be Islamabad
• The award of the arbitration tribunal duly shall be final and binding on the

Electricity Market
Financial Framework

Settlement with IPPs
• Invoice receipt
• Invoice processing and approval
• Demand of funds
• FIFO method and payment priority
• Daily disbursement to IPPs
• Invoice due dates
• All IPPs invoices are due for payments within [30] days of receipt
• Delayed payments Invoice
• Delayed payment interest is invoiced and paid for every day of delay.
• Interest rate KIBOR + [4.5]% per annum

Settlement with DISCOs
• Billing to DISCOs
• Agency function of CPPA-G
• Basket price and concept of transfer pricing
• Fuel price adjustment
• Settlement with DISCOs
• Non-recovery of cost of electricity and circular debt
• Volume
• Causes
• Implications and
• Remedies

Electricity Market
Risk Analysis

Project Risk Analysis and Allocation

Project Risk Analysis and Allocation

Risk Explanation Allocation

Completion • Delay in construction • Project company
risk • EPC contractor
Cost overrun • Cost escalation during design and • Project company
risk construction phase • EPC contractor
Design risk • Design may not meet the • Project company
specification and performance • Equipment manufacturer
standards • EPC contractor

Project Risk Analysis and Allocation Cont…

Risk Explanation Allocation

Construction • Loss associated with physical • Project company
risk construction • EPC contractor
• Purchaser
Operation and • To operate the plant according to • Producer
Maintenance best utility practices
Volume risk • Inefficiency of the plant • Seller
• Risk that the plant is not able to
generate required volume of

Project Risk Analysis and Allocation Cont…
Risk Explanation Allocation
Grid Failure • Risk that the purchaser is • Purchaser
Risk unable to evacuate the power • Sellers risk is mitigated
through committed capacity
• In renewables

Pricing risk • Risk of change in sale price • Purchaser through upfront

• Generator ability to meet the tariff
O&M cost as well as equity and • Pass through charges
debt payments

Project Risk Analysis and Allocation Cont…
Risk Explanation Allocation
Interest rate • Possibility of variation in market rate • Purchaser through
risk of interest payment on debts indexation
Debt • Insufficiency of cash to repay debt • Purchaser through
repayment or interest committed CPP
Exchange rate • Possibility of local rupee Purchaser through
risk depreciation indexation
Inflation risk• Impact of local inflation upon sellers Purchaser through
cost indexation
Change in law • Impact of change upon the seller • Purchaser

Project Risk Analysis and Allocation Cont…
Risk Explanation Allocation
Change in tax • Possibility of change in income and • Purchaser
rates other tax rates
Force majeure • Impact of any unforeseen/ unavoidable • Covered
political and/or economic conditions

Demand risk • Risk that nation-wide demand of • Purchaser

electricity changes
Resource risk • Non availability of natural resources • Seller
• Water, gas, oil
Purchasers • Purchasers inability to pay cost of • GoP through
default risk electricity sovereign guarantee

Power Purchaser Risk Analysis
• Unutilized Commissioned Capacity Risk
• Demand forecasting error
• Load shedding
• Capacity trap
• Take or pay tariff regime
• Technology obsolescence