W|EPC: Analyzing Energy Project Contract Terms – Risks, Strategies & Comps

W|EPC: Analyzing Energy Project Contract Terms – Risks, Strategies & CompsKey Takeaways:1) Analyzing EPC Risk Avoidance: Comps & Techniques For Investors, Owners, & Contractors    W|EPC analyzed ~$20B of publicly available EPC lump sum turn-key (LSTK) contracts, focusing on sensitive or contentious terms used to allocate risk, manage performance expectations, & establish a framework for third-party indemnification and liquidated damages, etc. (Pages 3, 5-7, & 9-17).  Specific points of emphasis:Investors: Leveraging a project’s future expansion plans to protect ROE and/ maximize options (ROFR) options. (Pages 5, 9-11)Owners: Finding & justifying onerous contract terms as market or on-the-run. Contractors: Avoiding those onerous contract terms.2) Analyzing Notable Risks:    Liability & Indemnity: Existing Facilities can be problematic for Contractors & expose stakeholders. (Pages 5, 9-11)• Performance Guarantees & Damages: Numerous performance guarantees were publicly disclosed (likely inadvertently) that illustrates risks & production, emissions, and/or power consumption liabilities. (Pages 6, 12-14)• Technical Risk Allocation: One project’s subsurface provisions are tighter and limit change orders provisions for differences in soils data. (Pages 7, 15-17)