DEVELOPMENT OF A PROTOTYPE POWER PURCHASE AGREEMENT AND TRAINING PROGRAM FOR THE CARIBBEAN ELECTRIC UTILITY SERVICES CORPORATION

(CARILEC)

Final Report Contract number: COMP 2-1 Report date: December 7, 2011

Project: Inter-American Development Bank (IDB) funded Energy Efficiency and Renewable Energy Project for the Caribbean Electric Utility Services Corporation (CARILEC) Prepared by: KEMA Inc. USA

TABLE OF CONTENTS AUTHORs NOTES ........................................................................................ 3 1 INTERPRETATION ..................................................................................... 5 2 SALE AND PURCHASE OF ENERGY..................................................... 6 3 TERM ............................................................................................................ 7 4 CURRENCY, PAYMENTS AND BILLING ............................................... 8 5 PRE-OPERATION OBLIGATIONS......................................................... 10 6 INTERCONNECTION ............................................................................... 12 7 METERING................................................................................................. 14 8 OPERATION AND MAINTENANCE....................................................... 16 9 MUTUAL WARRANTIES AND COVENANTS OF THE PARTIES ..... 21 10 DEFAULTS AND TERMINATION......................................................... 23 11 FORCE MAJEURE ................................................................................. 27 12 INDEMNIFICATION AND LIABILITY ................................................... 30 13 INSURANCE ............................................................................................ 32 14 RESOLUTION OF DISPUTES............................................................... 34 15 GOVERNING LAW ................................................................................. 35 16 NOTICES.................................................................................................. 36 17 MISCELLANEOUS PROVISIONS ........................................................ 37 18 SCHEDULES ........................................................................................... 41
Schedule 1- Defined Terms .....................................................................................................41 Schedule 2- Calculation of payments...................................................................................46 Schedule 3-Testing and commissioning .............................................................................50 Schedule 4- Interconnection facilities..................................................................................50 Schedule 5- Metering ................................................................................................................53 Schedule 6-Technical specifications....................................................................................57 Schedule 7- Operating Committee ........................................................................................60 2

AUTHORs NOTES
The specific objective of this project is to develop a prototype power purchase agreement document to facilitate renewable energy projects. This PPA is holistic in the sense that it will be applicable to different type of renewable projects. Regarding this prototype of power purchase agreement we have to remark that: 1. This prototype of power purchase agreement outlines the basic provisions commonly found in power purchase agreements in respect of international, private renewable power projects. There are, of course, an infinite number of variations that the parties could utilize in drafting an actual agreement. This document should be viewed as an example that raises issues for discussion and this prototype of power purchase agreement has to be fine-tuned to each specific situation. 2. The text of the Agreement should be read in conjunction with the attached endnotes, which contain explanatory notes, comments and suggestions to aid the reader. In drafting an actual power purchase agreement, neither endnotes nor footnotes should be included. 3. Most privately owned electric power projects will be financed through a combination of debt and equity, with the debt portion often structured on a project finance basis. Perhaps the most important factor as to whether or not the financial markets will view a given project as financeable is the power purchase agreement. Thus, in drafting this Agreement, we have attempted to cover all the key elements that developers, utilities and lenders typically will expect to be included in a well-structured purchase agreement. All power purchase agreements share certain characteristics and each power purchase agreement is fact-and-circumstance-specific and is generally the product of extensive negotiation. Specific Articles of the document should be adapted to fit with the specific circumstances of that electric power project 4. In this Prototype Agreement we have assumed that the generating facility will not be commissioned in stages (generating unit by generating unit) but, instead, will come on line as an integrated whole on its Commercial Operations Date. 5. Nevertheless, we occasionally highlight in the text and endnotes of the Prototype Agreement ways in which the Prototype Agreement might differ if the conditions differ from our assumptions. 6. Schedule 1 sets forth the definitions of the capitalized terms used both in the text of the Prototype Agreement and in the endnotes to the Prototype Agreement. In an actual power purchase agreement (with no endnotes), fewer definitions will be required. 7. Schedules to a Power Purchase Agreement are largely fact-and technology-specific. However, when appropriate in the text and in the endnotes, we do indicate relevant information that would likely be included in the Schedules.

AGREEMENT

BETWEEN:

[Legal name, form and country of Developer/Seller entity]) having its registered office at [complete Address of Developer entity] ("Developer) and [Legal name, form and country of utility/Buyer entity]) having its registered office at [complete Address of Utility entity] ("Utility). Developer and Utility may be referred to individually as a "Party" and collectively as "Parties" made this date, [date of agreement execution]. WHEREAS: (A) Developer plans to design, finance, construct, operate and maintain a description, location, and capacity or energy output of Facility] ("Facility") [name,

(B) Developer agrees to make available and to sell the Net Energy Output1 from Facility to Utility; and (C) Utility wishes to purchase all the net electrical energy generated by the Facility pursuant to the terms and conditions in this Agreement;

NOW, THEREFORE, in consideration of the mutual benefits to be derived, the representations, warranties, conditions and promises contained in this Agreement, and intending to be legally bound by this Agreement, the Parties agree as follows.

1 INTERPRETATION
1.1 Interpretation

In interpreting this Agreement, capitalized terms and expressions shall have the meanings given them in Schedule 1 (Defined Terms) or the text in which they appear. Terms not defined in Schedule 1 (Defined Terms) shall have the meanings ascribed to them in the Oxford English dictionary or, for terms of art or where the context indicates, the meanings given the terms by common usage in the industry. 1.2 Further, in interpreting this Agreement: 1.2.1 Except where expressly stated otherwise, the headings of the Articles are primarily for convenience and in the event of a conflict between a heading and the more specific provision of a Article, the language of the Article shall control in construing the provisions of this Agreement; 1.2.2 1.2.3 The singular includes the plural and vice versa; References to Articles, Sub-Sections Schedules and similar designations are, unless the context otherwise requires, references to designations in this Agreement References to any agreement, enactment, ordinance or regulation includes any amendment thereof or any replacement in whole or in part.

1.2.4

2 SALE AND PURCHASE OF ENERGY

2.1 Sale to Utility.

Subject to, and in accordance with the terms of this Agreement, the Developer shall make available and sell to Utility, and Utility shall purchase from Developer, the Net Energy Output of the Facility, up to a maximum of [maximum output capacity or lesser contracted amount] 2 plus or minus [variance allowance, based on manufacturer specifications] percent, upon and after the Commercial Operations Date. During the Commissioning of the Facility, Utility shall pay to the Developer in arrears on the [_____] Business Day of each Month, the Prices according to Schedule 2. 2.2 Energy Take.

Upon and after the Commercial Operations Date, Utility shall accept energy up to a maximum total energy equivalent of [contracted maximum] kWh plus or minus [certain percentage], provided that Utility may accept energy above this level at its sole discretion. 2.3 Sale to Developer.

Subject to, and in accordance with, the terms of this Agreement, Utility shall make available and sell to the Developer, and the Developer may purchase from Utility, capacity and energy, on the same basis as Utility's then prevailing tariff for electricity sold to industrial customers. 2.4 Prices.

The amount of the payments due from Utility to Developer for Net Energy Output from the Facility shall be calculated in accordance with Schedule 2 (Calculation of Payments) using the prices defined in that schedule. The payments shall be made at the times specified in Article 4.2 (Billing and Payment).

3 TERM
3.1 Initial Term.

The initial term of this Agreement shall commence on the date of this Agreement and shall end [length of agreement term] from the Commercial Operations Date, unless this Agreement is terminated earlier pursuant to the provisions of this Agreement allowing for termination in the event of a breach or default by either of the Parties ("Early Termination"). Any Early Termination of this Agreement shall be without prejudice to all rights and obligations of the parties accrued under this Agreement prior to such termination. 3.2 Renewal Term.3

This Agreement may be extended by either Party for a single additional period of [agreed renewal term] years, on the terms defined by this Agreement, provided that: (a) The Party seeking an extension has made a prior written request to extend the agreement to the other Party, such request to be made not more than 36 months and not less than 24 months before the end of the initial term of this Agreement; (b) The Party receiving a request to extend the agreement has not rejected the request in a written response to the Party seeking an extension, given not more than 3 months following receipt of the request for extension; and (c) There is not an event of default of either Party, as defined in Article 10.1 (Developer Defaults) and 10.2 (Utility Defaults), on the date the extension begins.

4 CURRENCY, PAYMENTS AND BILLING

4.1 Currency.

All payments required pursuant to any provision of this Agreement (including provisions applicable in the event of any breach, default, or other failure of performance) shall be calculated and paid in [agreed currency]. 4 4.2 Billing and Payment 4.2.1 Monthly Invoices. Within [number] days after the end of each month, each Party shall prepare and deliver to the other Party an invoice reflecting amounts payable by the other Party pursuant to this Agreement. Developer's invoice to Utility shall include calculations, in reasonable detail, of the amounts due pursuant to Schedule 2 (Calculation of Payments). Utility's invoice to Developer shall include calculations in reasonable detail of the amounts owed to Utility with specific reference to applicable tariffs. 4.2.2 Special Invoices and liquidated damages. If there is an event of default, breach, or other failure to perform for which this Agreement specifies payment of amounts as liquidated damages or otherwise, the Party to be compensated shall prepare and deliver to the other Party a special invoice that shows the calculation of any amounts due pursuant to this Agreement, specifies the provisions applied, and details the periods of delay or other factors on which the claim is based. (See Schedule 2) 4.2.3 Late Payments. Payments not made by the due date shall accrue daily interest at the greater of [specific daily interest rate or identified daily interest rate proxy] 5 or the maximum lawful rate. Any such charges for interest shall be calculated by the paying Party and included with payment of the invoice without the need for an additional invoice for those amounts. 4.3 Disputed Invoices.

If either Party, on reasonable grounds, disputes any portion of a monthly invoice or the correctness of the amount received in payment of an invoice, then that Party shall, within [________] days of the receipt of such invoice or payment, serve a notice to the other Party indicating the amount and basis of the dispute. Neither Party shall be required to pay a disputed amount pending resolution of the dispute. The dispute shall be settled by mutual discussion and, if necessary, resolved pursuant to Article 14 (Resolution of Disputes). If it is determined that either Party owes the other an amount of money, the owing Party shall, within [_____] days after its receipt of such determination, pay such sum together with 8

interest at a rate equal to [specific interest rate or identified interest rate proxy ] to the other Party in the manner specified for payment of the disputed invoice.

5 PRE-OPERATION OBLIGATIONS

5.1

Construction and Commissioning.

Developer shall undertake and be obligated (a) to complete construction of the Facility and (b) to achieve successful completion of the required test operations prescribed in Schedule 3 (Testing and Commissioning) no later than the Required Commercial Operations Date. In the event that the Facility does not successfully complete the required test operations prescribed in Schedule 3 (Testing and Commissioning) on or before the Required Commercial Operations Date, and Utility is in full compliance with all its material obligations under this Agreement, then Developer shall be liable to Utility in an amount to be determined in accordance with the liquidated damages provisions of Schedule 2 (Calculation of Payments).

5.2

Permits and Licenses.

Developer, at its sole cost and expense, shall acquire and maintain in effect all permits, licenses and approvals required by all local agencies, commissions and authorities with jurisdiction over Developer or the Facility, so that Developer may lawfully perform its obligations under this Agreement. 5.3 Credits, Grants, and Preferences.

Developer shall be responsible for applying for and obtaining any available and applicable tax credits, grants, loans or preferences from governmental or other institutions. Utility shall cooperate with Developer by providing requested documentation or other confirmation relating to the Facility or to this Agreement, subject to the confidentiality terms of Article 17.4 (Confidentiality). 5.4 Energy before Commissioning 6 5.4.1 Upon the Developer's request, Utility shall provide energy for construction, testing, commissioning, start-ups and emergencies, subject to availability and Utility's ability to deliver such energy to the Facility. The Developer shall pay Utility for such energy in accordance with Utility's then prevailing tariff rate for industrial facilities. Utility is hereby authorized to set-off the charges for such energy delivered by Utility to the Developer pursuant to this Article 5.4.1 against any Energy Payments due and owing to the Developer.

5.4.2

Prior to the Commercial Operations Date, Utility shall use reasonable efforts to accept all energy produced by the Facility during testing performed 10

pursuant to the Construction Contract and Commissioning, and Utility shall pay the Developer for such energy at the rate set forth in Article 2.1.7 5.5 Inspection

Utility and/or its representatives shall have the right to observe the progress of the construction of the Facility and the Testing and Commissioning of the Facility in accordance with Schedule 3. The Developer shall comply with all reasonable requests of Utility for, and assist in arranging, any such observation visits to the Facility. Such visits to the Facility shall not be construed as an endorsement by Utility of the design thereof nor as a warranty by Utility of the safety, durability or reliability of the Facility.8 5.6 Access to Site

Upon reasonable prior notice from the Developer and at reasonable times, Utility shall grant the Developer reasonable access to any lands owned by Utility that are necessary for designing, financing, constructing, operating and maintaining the Facility.

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6 INTERCONNECTION
6.1 Developers Responsibilities. 6.1.1 In accordance with the requirements of Schedule 4 (Interconnection), Developer shall design, construct, install, commission, own, operate and maintain the Interconnection Facilities, and any parts thereof, in accordance with the terms of this Agreement. Developer shall design, construct, install, commission, own, operate and maintain all auxiliary and interconnecting equipment on the Developer's side of the Interconnection Point, provided that Utility shall have the right to set requirements to the interconnection facilities, such as technical, operational and safety requirements, and shall furthermore have the right to view such equipment and to object to the use of any equipment if, in the reasonable opinion of Utility, the use of such equipment would adversely affect Utility's grid or system. Developer shall complete construction of the Interconnection Facilities [number of days] prior to the scheduled Commercial Operations Day. Upon completion of the interconnection facilities described in Article 6.1.1 and Article 6.1.2, Developer shall test such Interconnection Facilities in accordance with the procedures set forth in Schedule 4 Developer's Interconnection Facilities shall be connected to Utility's Grid by means of suitable switchgear and protective devices.

6.1.2

6.1.3

6.1.4

6.1.5

6.2

Utilitys Responsibilities. 6.2.1 Utility will use its best endeavor to assist the Developer in obtaining, in a timely manner and at a reasonable cost, all permits, permissions and way leaves necessary for the construction of the Interconnection Facilities and associated equipment. Such assistance shall not be unreasonably withheld. The reasonable expenses of Utilitys assistance shall be the responsibility of Developer. Utility will be responsible for the design, construction, installation, commissioning and testing of any new transmission lines (and associated switchgear and protective devices) needed to connect the Facility at the Interconnection Point to Utilitys Grid. Utility shall own, operate and maintain the line and associated equipment.

6.2.2

6.2.3

Utility shall complete construction of the transmission line [ number of days] prior to the scheduled Commercial Operations Day

6.3

Access to Facility. 12

Developer shall permit Utility such access to the Facility as Utility shall require for the testing of Interconnection Facilities and Developer shall cooperate with Utility in such testing, provided that no testing, carried out by Utility, shall impose upon Utility any liability, or relieve Developer from any liability that it would otherwise have had for its negligence or other wrongful act in the design, construction, operation or maintenance of the Interconnection Facilities. 6.4 Protective Devices. 6.4.1 Each Party shall provide the other Party, in advance, written notice of any changes to be made to the Facility or to any facility on Utilitys grid that may affect the proper coordination of protective devices between the two systems. Developer shall not disable or otherwise change or modify any protective equipment in its Interconnection Facilities or change or modify the operation or settings thereof without first requesting and receiving the written approval of Utility, which approval shall not be unreasonably withheld. With reasonable notice to Developer, Utility may require Developer to modify or to expand the protective devices by means of which the Facility is connected to Utilitys grid. In such event, Utility shall reimburse the Developer for the reasonable costs of such modification or expansion.

6.4.2

6.4.3

6.5

Testing of Interconnection Facilities

The Parties shall cooperate in testing the Interconnection Facilities in accordance with Schedule 3 and the schedule developed by the Operating Committee (but in no event later than the time provided in Article 6.1.3) and at such other times thereafter as either Party may reasonably require. Each Party shall bear its own costs in connection with any such testing.

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7 METERING
7.1 Ownership of Metering System. 7.1.1 The Developer, at its expense, shall design, finance, construct install, own, procure, operate and maintain the Metering System in accordance with Schedule 5.9 7.1.2 The Developer, at its expense shall design, finance, construct, install, own, operate and maintain meters and metering devices for backup purposes pursuant to Schedule 5 (Backup Metering System) in addition to the Metering System.10

7.2

Testing and Inspection of Metering Equipment.

Developer shall inspect and test, at its own expense, the Metering System and the Backup Metering System for accuracy in accordance with Schedule 5 by the date required for the completion of the Interconnection Facilities under Article 6.1.3 and thereafter at intervals of ] Days. With respect to each testing of the Metering System or the not less than [ Backup Metering System, Developer shall give the Utility no less than [ ] hours advance notice of such testing, and the Utility may have a representative present during any such testing, as well as during any inspection of the Metering System or Backup Metering System or adjustment thereof (but the test, inspection or adjustment may be taken if the Utility has no representative present).11 7.3 Measurement of Net Energy Output. 7.3.1 Developer shall read the Metering System Monthly on the [ ] Business Day of each Month (or such other Day as may be agreed upon by the Operating Committee) for the purpose of measuring the Net Energy Output12 . ] hours notice of its Developer shall give the Utility not less than [ intention to read the Metering System. The Utility shall have the right to have a representative present during any such reading (but the reading may be taken if the Utility has no representative present). Developer shall take and record such reading together with a photographic record thereof, and Developer shall maintain a log of all such meter readings. In the event that the Metering System is not in service as a result of maintenance, repairs or testing, then the Backup Metering System shall be used during the period that the Metering System is not in service and the foregoing provisions of this Article 7.3.1 shall apply to the reading of the Backup Metering System 7.3.2 When, as a result of any test pursuant to Article 7.2, the Metering System is found to be inaccurate by more than [ ] percent or is otherwise functioning improperly, then the correct amount of Net Energy Output delivered to Utility for the actual period during which inaccurate measurements were made, if any, shall be determined as follows:

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a) first, the readings of the Backup Metering System, if any, shall be utilized to calculate the correct amount of Net Energy Output, unless a test of such Backup Metering System, as required by either Party, reveals that the Backup Metering System is inaccurate by more than [ ] percent or is otherwise functioning improperly; b) if the Backup Metering System is not within the acceptable limits of accuracy or is otherwise functioning improperly, then the Developer and Utility shall jointly prepare an estimate of the correct reading on the basis of all available information including deliveries of Net Energy Output during periods of similar operating conditions when the Metering System was registering accurately; c) the difference between the previous payments by Utility for the period of inaccuracy or improper functioning and the recalculated amount shall be offset against or added to the next payment to the Developer under this Agreement, as appropriate. In no event, however, shall any adjustments be made for any period prior to the date on which the Metering System was last ] percent and not tested and found to be accurate within plus or minus [ otherwise functioning improperly. In the event that Utility and the Developer fail to agree upon any estimate pursuant to this Article 7.3.2, then the matter may be referred by either Party pursuant to Article 14 7.4 Sealing, Repair and Replacement of Meters 7.4.1 The Metering System and the Backup Metering System shall comply with Schedule 5 and shall be jointly sealed. Such seals shall be broken only by Developer personnel in the presence of personnel from the Utility when the Metering System or the Backup Metering System is to be inspected, tested or adjusted. When any component of the Metering System is found to be outside acceptable limits of accuracy or otherwise not functioning properly, Utility shall forthwith repair, recalibrate or replace such component of the Metering System. Similarly, when any component of the Backup Metering System is found to be outside acceptable limits of accuracy or otherwise not functioning properly, the Developer shall forthwith repair, recalibrate or replace such component of the Backup Metering System. Upon the completion of any examination, maintenance, repair or recalibration of, or replacement of any component in, the Metering System or the Backup Metering System, the relevant metering system shall be jointly sealed.

7.4.2

7.5

Telecommunications Equipment

The Developer shall provide at its sole cost and expense the telecommunications equipment specified in Schedule 5. The selection and installation of items to be provided by the Developer in accordance with this Article 7.5 shall be subject to the prior written approval of Utility.13 15

8 OPERATION AND MAINTENANCE

8.1 Operating Procedures

The Developer and Utility shall jointly develop written operating procedures for the Facility no later than [ ] Days prior to the Required Commercial Operations Date. Such operating procedures shall be based on the designs of the Facility, the Interconnection Facilities and the Utility Grid System and shall be consistent with the Functional Specifications; and shall deal with all operational interfaces between Utility and the Developer, including method of day-to-day communication, key personnel lists, clearances and switching practices, outage scheduling, capacity and energy reporting, operations log and reactive power support. The written operating procedures shall be subject to the prior written consent of Utility. This consent shall not be unreasonably withheld or delayed. 8.2 Operating Standards.

During the term of this Agreement, Developer shall operate and maintain the Facility in a manner consistent with Prudent Utility Practices and in accordance with the technical specifications and requirements set out in Schedule 6 (Technical Specifications). 8.3 Operation by the Developer. 8.3.1 During the term of this Agreement, beginning on the Commercial Operations Date, Developer shall keep Utilitys designated control center, from which Utility will interface with the Facility for operational purposes, informed as to the capacity of electrical energy available at the Facility and shall immediately advise the designated control center of any change in this capacity. 8.3.2 Subject to the Functional Specifications, the Developer shall operate and maintain the Facility in such a manner so as not to have an adverse effect on Utility's voltage level, voltage waveform or transmission and distribution system. The Developer shall, in accordance with the Minimum Functional Specifications, install protective relays within the Facility and/or the Interconnection Facilities having ratings and characteristics approved by Utility, and, subject to the Minimum Functional Specifications, shall maintain the settings of all such relays at the levels acceptable to Utility. The Developer shall not change the settings of such relays without the prior written consent of Utility. This consent shall not be unreasonably withheld or delayed. Facility Performance. Developer shall be afforded adequate Scheduled Outage, Maintenance Outage and Forced Outage provisions to facilitate necessary maintenance to the Facility provided that the average annual Net Energy Output from the Facility during any [for example five] year period shall not be less than [ amount that takes account of planned maintenance] MWh.

8.3.3

8.3.4

16

8.4

Operation by Developer in the case of intermittent energy sources and other renewable energy sources (such as wind power, solar power, run of river hydropower, biomass etc.) 14 8.4.1 Daily prediction of the Facilities output Developer will provide Utility a daily prediction of the Facilitys output for each hour of the next day. 8.4.2 Power Production expectations for 12 months At the beginning of each month Developer will provide Utility with power production expectations for the next 12 months to come.

8.5

Scheduled Outages. 8.5.1. At least [ ] Days prior to the Scheduled Commercial Operations Date, the Developer shall submit to Utility its desired schedule of Scheduled Outage periods for the remainder of the Year in which the Scheduled Commercial Operations Date occurs. Thereafter, by [date] of each Year after the Year in which the Scheduled Commercial Operation Date occurs, the Developer shall submit to Utility its desired schedule of Scheduled Outage periods for the following Year. 8.5.2 At least [ ] Days prior to the Scheduled Commercial Operations Date and [ ] Months prior to the commencement of each Year after the Year in which the Scheduled Commercial Operation Date occurs, Utility shall notify the Developer in writing whether the requested Scheduled Outage periods are acceptable. If Utility cannot accept any of the requested Scheduled Outage periods, Utility shall advise the Developer of a period when Utility determines such unacceptable Scheduled Outage period can be rescheduled. Such rescheduled period shall be as close as reasonably practicable to the requested period, shall comply with the Minimum Functional Specifications, and shall be of equal duration as the requested period. The Developer shall conduct Scheduled Outages only during periods agreed to in writing by Utility as aforesaid. 15 Commencing with the Commercial Operations Date, the Developer may not schedule more than a total of [_________] Facility Hours of Scheduled Outages during any Operating Year. 16 Utility may, upon [___________] Days prior written notice, require the Developer to reschedule a Scheduled Outage; provided, however, that Utility shall not request that such Scheduled Outage be rescheduled in a manner or time outside the Minimum Functional Specifications. 17 Developer shall use its reasonable endeavors to coordinate its maintenance program for the Interconnection Facilities with the approved Scheduled Outages so as to minimize any disruption to the operation of the Facility.

8.5.3

8.5.4

8.5.5

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8.6

Forced Outages.

Developer shall use its reasonable efforts to limit Forced Outages. Developer shall be afforded Forced Outage provisions (including in the average annual Net Energy Output requirement of Article 8.3.) to facilitate emergency maintenance of the Facility when the circumstances warrant. 8.7 Emergencies 8.7.1 Emergency Plans. Three months prior to the Commercial Operations Date, Utility and Developer shall jointly establish plans for operating the Facility during an Emergency affecting Developer or Utility. Such plans shall include, without limitation, recovery from a local or widespread electrical blackout and voltage reduction to effect load curtailment. 8.7.2 Outage during Emergency. During an Emergency, Developer shall supply such energy as it is able to generate within the Technical Specifications of Schedule 6. If the Facility has a Scheduled Outage or a Maintenance Outage and such outage occurs or would occur coincident with an Emergency, for purposes of this Agreement the Emergency shall be considered part of the Scheduled Outage or Maintenance Outage and Developer shall use all reasonable efforts to expedite completion of the work to restore power supply as soon as possible. 8.8 Cessation of Operation.

If, after the Commercial Operations Date, Developer, other than because of an event of Force Majeure, a Scheduled Outage, Maintenance Outage or a Forced Outage (which Scheduled Outage, Maintenance Outage and Forced Outage does not cause the Developer to exceed the maximum outage allowed under the requirements of Article 8.3.4 Facility Performance above), allows Abandonment of the Facility without the prior written consent of Utility, then Utility shall be entitled to enter the site and, in consultation with the Operating Committee established pursuant to Article 8.8 (Operating Personnel) and Schedule 7 (Operating Committee), appoint a manager of suitable competence to manage and operate the Facility, subject to the Technical Specifications of Schedule 6, and in accordance with Prudent Utility Practice until Developer demonstrates to the reasonable satisfaction of Utility that it can and will resume normal operations of the Facility. During any period that Utility operates the Facility pursuant to this Article, Utility shall be entitled to receive only such consideration as is reasonable (a) to pay the manager, at a level commensurate with industry standards; and (b) to reimburse Utility for its reasonable and prudently incurred administrative, operational and other expenses, during and arising from its operation of the Facility. Utility shall render a full accounting to Developer at regular intervals during the period of its operation of the Facility pursuant to this Article, and at the close of its management. Utility shall continue to make payments for Net Energy Output in accordance with Article 2 (Sale and Purchase of Energy) and Schedule 2 (Calculation of Payments). 18

During its operation of the Facility in accordance with the provisions of Article 8.7 above, Utility shall not be liable for any damage to the Facility or any part thereof or for any damage or loss suffered by the Developer or third party, except where such damage or loss is caused by the gross negligence or the deliberate action or inaction of Utility. 8.9 Operating Personnel. 8.9.1 Operating Committee. The Parties shall establish an Operating Committee composed of [odd number] members. Developer and Utility shall each appoint an equal number of the members, and the Utility shall appoint the Chairman of the Operating Committee.18 The obligations and responsibilities of the Operating Committee and the rules governing meetings of the Operating Committee shall be as set forth in Schedule 7. 8.9.2 Qualifications and Coverage. For the purposes of (a) operating and monitoring the Facility and (b) coordinating operations of the Facility with the Utility grid, Developer shall employ, directly or indirectly, only personnel who are qualified and experienced. Developer shall ensure that the Facility is being monitored by such personnel, remotely or otherwise, at all times, 24 hours each day and 7 days each week commencing 14 days prior to the Commercial Operations Date. 8.9.3 Long Term Service Agreement (LTSA). Developer may enter in a long term service agreement to maintain the Facility throughout the term of this Agreement. Developer shall submit such agreement to Utility for its prior written approval, which approval shall not be unreasonably withheld or delayed. Neither such appointment nor the approval thereof by Utility, however, shall relieve Developer of any liability, obligation, or responsibility resulting from a breach of this Agreement. 8.10 Inspection and Records. 8.10.1 Utility Inspections. Utility shall have the right to visit, observe and examine the Facility and the operation thereof, upon reasonable advance notice to Developer, for the purpose of facilitating the technical operation and administration of this Agreement. Such visits and observations shall not be construed as an endorsement by Utility of the design or operation of the Facility nor as a warranty by Utility of the safety, durability or reliability of the Facility and shall not relieve Developer of any of its responsibilities under this Agreement. 8.10.2 Developer and Utility Records. Each Party shall keep complete and accurate records and other data required by each of them for the purposes of proper administration of this Agreement. 19

Among other records and data, Developer shall maintain an accurate and upto-date operating log for the Facility, which log shall include (without limitation) records of: a) Real and Reactive Power production for each clock half-hour, and electrical energy frequency and interconnection bus voltage at all times; b) Changes in operating status, Scheduled Outages, Maintenance Outage and Forced Outages; c) Any unusual conditions found during inspections; and d) Any other items as mutually agreed upon by the Parties. 8.10.3 Copies of Records. Either Party shall have the right, upon reasonable prior written notice to the other Party, to examine or to make copies of the records and data of the other Party relating to the proper administration of this Agreement, at any time during normal office hours during the period such records and data are required to be maintained. All such records or data shall be maintained for a minimum of 60 calendar months after their creation, and for any additional length of time required by regulatory agencies with jurisdiction over the Parties. Upon expiration of such period, neither Party shall dispose of or destroy any such records without 30 days prior written notice to the other Party, and the Party receiving such notice may, at its option, elect to receive such records, in lieu of their disposal or destruction, by giving the notifying Party notice of its election at least 10 days prior to the expiration of the 30-day period.

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9 MUTUAL

WARRANTIES AND COVENANTS OF THE

PARTIES
9.1 Warranties.

Each Party warrants to the other that: 9.1.1 It is duly formed, validly existing and in good standing under the laws of [country of Developer entity] and is qualified to do business in [country where Facility is located] and has complied with all applicable laws; 9.1.2 It has full power to carry on business and to enter into, legally bind it by, and perform its obligations under this Agreement; 9.1.3 The signatories to this Agreement on its behalf are duly authorized and competent to execute and deliver this Agreement as being valid and legally binding on it; 9.1.4 The execution, delivery, and performance of this Agreement, subject to the granting and maintenance of the Relevant Consents, does not, and will not, constitute a violation of any legal or contractual constraint validly applied to Developer. 9.1.5 There are, to the best of its knowledge, no existing or threatened legal, contractual, or financial matters of any kind that could reasonably be expected to affect materially either its ability to perform its obligations under this Agreement or the enforceability of this Agreement; and

9.1.6 No information given by it in relation to this Agreement contains any material misstatement of fact or omits to state a fact that would be materially adverse to the enforcement of the rights and remedies of the other Party. 9.2 Developer Covenants.

Developer hereby covenants as follows: 9.2.1 During the term of this Agreement, the Developer shall design, finance, construct, own, operate and maintain the Facility in accordance with (a) this Agreement, (b) its applicable Schedules, (c) sound engineering and construction practices and Prudent Utility Practice, (d) the operating procedures developed pursuant to Article 8, (e) all laws, rules, regulations and ordinances that are enforceable or binding upon Developer (f) the environmental guidelines and occupational health and safety standards of [Host Country],19 (g) such requirements as Utility may reasonably deem necessary in order for the Interconnection Facilities to be designed and constructed in accordance with sound engineering and construction practices and Prudent Utility Practice;

9.2.2 the Facility will be designed, constructed and completed (a) in a good and workmanlike manner, only with materials and equipment that are new, utility 21

grade and suitable for their intended use; (b) in such a manner as to provide that the useful life of the Facility, with proper operation and maintenance, will be at least equal to [__________] years; and (c) in accordance in all material respects with sound engineering and construction practices and Prudent Utility Practice; 9.2.3 Developer shall successfully complete the test operations required by Schedule 4 (Commissioning Requirements) for the Facility on or before the Required Commercial Operations Date; 9.2.4 Developer shall notify Utility in writing of all apparatus that is from time to time included in Developer's Facility installations and that is likely to cause undue disturbance of Utility's system. Such apparatus shall be utilized only with the approval of, and as specified by, Utility, in writing. Such approval shall not constitute a Utility any warranty or representation and shall not operate to increase the liability of Utility with respect to third parties.

9.2.5 Where approval is granted pursuant to Article 9.2.4 above, Developer shall use all reasonable efforts to prevent any apparatus being utilized in such a manner as to cause any undue disturbance of Utility' system. If Utility finds that any such apparatus is being utilized in a manner that causes such disturbance, Developer shall, upon receiving notice of such finding from Utility, immediately cease to so utilize such apparatus until steps have been taken to the reasonable satisfaction of Utility to eliminate such disturbance; alternatively, Developer shall replace such apparatus by other apparatus approved by Utility. In cases of emergency, oral notice will suffice for the purposes of this Article, provided that such oral notice shall be confirmed in writing within 48 hours of being given to Developer. 9.3 Utility Covenants. 9.3.1 Utility covenants to make the payments for Net Energy Output as required by this Agreement as they become due without setoff against the amounts pursuant to Schedule 2 for delivered electrical energy. 9.3.2 Where Utility must approve or Utility and Developer jointly must establish specifications for connections of the Facility and related apparatus, Utility covenants to act reasonably in so doing, with the objective of coordinating Facility and Utilitys Grid operations so as to maximize the Net Energy Output of the Facility. 9.3.3 Shall operate and maintain its transmission system to the satisfaction of the Developer in accordance with Prudent Operating Practices so as not to have aerial adverse effect on the Facility

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10 DEFAULTS AND TERMINATION

10.1 Developer Events of Default

Each of the following events shall be events of default by the Developer (each a Developer Event of Default), which, if not cured within the time permitted (if any) under Article 10.3, shall give rise to the right on the part of Utility to terminate this Agreement pursuant to Article 10.4; provided, however, that no such event shall be a Developer Event of Default hereunder if (a) it results from a breach by Utility of this Agreement or (b) if it occurs as a result of a Force Majeure for the period provided pursuant to Article 11.4: 10.1.1 Abandonment of construction of the Facility by the Developer after the commencement of Construction, without the written consent of Utility 10.1.2 Failure of Developer to achieve the requirements for the Commercial Operations Date [_____] after the Required Commercial Operations Date. Unless, prior to the expiration of such [_____] period, Utility and Developer agree on the length, and terms and conditions of an extension of the Required Commercial Operations Date, at the expiration of the [_____] year period Utility shall either declare a default or waive its right to declare a default pursuant to this Article. Utility may waive its right to demand payment of the liquidated damages determined in accordance with the liquidated damages provisions of Schedule 2 (Calculation of Payments). 10.1.3 Willful alteration or tampering by Developer or its employees or agents of the Interconnection Facilities without the prior written consent of Utility, except in situations where such actions are taken to prevent immediate injury, death, or property damage and the Developer uses its best efforts to provide Utility with advance notice of the need for such actions. 10.1.4 Abandonment of operation of the Facility by the Developer after the Commercial Operations Date, without the written consent of Utility20. 10.1.5 Any failure by the Developer to make any payment or payments required to be made by it under this Agreement within [___________] Days after the Developer is given notice that the payment was not made by the due date for payment; 10.1.6 Except when taken for the purpose of merger or reorganization (provided that such merger or reorganization does not affect the ability of the merged or reorganized entity to perform its obligations under this Agreement), the occurrence of any of the following events: a) passage of a resolution by the shareholders of Developer for the winding up of Developer; b) admission in writing by Developer of its inability generally to pay its debts as they become due; 23

c) appointment of a Liquidator in a proceeding for the winding up of Developer after notice to Developer and due hearing; or d) a court order to wind up Developer 10.1.9 Any material breach by Developer of any representation, warranty or covenant in this Agreement. 10.2 Utility Defaults

Each of the following events shall be events of default by Utility (each a Utility Event of Default), which, if not cured within the time permitted (if any) under Article 10.3, shall give rise to the right on the part of the Developer to terminate this Agreement pursuant to Article 10.4; provided, however, that no such event shall be a Utility Event of Default hereunder if (a) it results from a breach by the Developer of this Agreement or (b) if it occurs as a result of a Force Majeure for the period provided pursuant to Article 11.4: 10.2.1 The occurrence of any of the following events, except where done for the purpose of merger or reorganization that does not affect the ability of the merged or reorganized entity, as the case may be, to perform its obligations under this Agreement: a) passage of a resolution by the shareholders of Utility for the winding up of Utility; b) admission in writing by Utility of its inability generally to pay its debts as they become due; c) appointment of a Liquidator in a proceeding for the winding up of Utility after notice to Utility and due hearing; or d) a court order to wind up Utility 10.2.2 Any failure by Utility to make any payment or payments required to be made by it under this Agreement within [___________] Days after Utility is given notice that the payment was not made by the due date for payment; 10.2.3 Wilful alteration or tampering by Utility or its employees or agents with the Facility or Interconnection Facilities without the prior written consent of Developer, except in situations where such actions are taken to prevent immediate injury, death, or property damage and Utility uses its best efforts to provide Developer with advance notice of the need for such actions 10.2.4 Any material breach by Utility of any representation, warranty or covenant in this Agreement. 10.3 Notice and Cure 10.3.1 A Utility Notice of Default or a Developer Notice of Default shall specify in reasonable detail the Developer Event of Default or Utility Event of Default, respectively, giving rise to the Notice of Default. In the case of a default set

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forth in Article, 10.1, and 10.2, the defaulting party shall have [___________] Days (i.e., non-holiday weekdays) within which to cure the default. 10.3.2 Upon occurrence of an Event of Default that is not cured within the applicable period (if any) for cure, the non-defaulting Party may, at its option, initiate termination of this Agreement by delivering a written notice (Notice of Default) of its intent to terminate this Agreement to the defaulting Party. A notice of Default shall specify in reasonable detail the Event of Default giving rise to the Notice of Default 10.4 Rights and Remedies upon an Event of Default. 10.4.1 Developer Default. If a Developer Event of Default has occurred and the Developer Event of Default has not been cured within the period specified in Article 10.3, Utility, in its sole discretion, may take any or all of the following actions: a) terminate this Agreement by delivering written notice to the Developer (Utility Termination Notice) or b) proceed in accordance with Article 14 (Resolution of Disputes) to protect and enforce its rights and to recover any damages to which it may be entitled, including all costs and expenses reasonably incurred in the exercise of its remedy, or c) At its election, take such steps as are reasonably necessary to cure the default before so proceeding. 10.4.2 Utility Default. If a Utility Event of Default has occurred and the Utility Event of Default has not been cured within the period specified in Article 10.3, Developer, in its sole discretion, may take any or all of the following actions: d) terminate this Agreement by delivering written notice to the Utility (Developer Termination Notice) or e) proceed in accordance with Article 14 (Resolution of Disputes) to protect and enforce its rights and to recover any damages to which it may be entitled, including all costs and expenses reasonably incurred in the exercise of its remedy, or f) At its election, take such steps as are reasonably necessary to cure the default before so proceeding.

10.4.3 Notwithstanding the above, the total amount of damages that Developer shall be entitled to for any breach of this Agreement by Utility shall not exceed, in the aggregate, the greater of the actual value of the remaining term of the agreement and the fair market value of the payments for Net Energy Output required over the remaining term of this Agreement. 10.5 Nature of Rights on Default.

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These rights and remedies shall not be exclusive but, to the extent permitted by law, shall be cumulative and in addition to all other rights and remedies existing at law, in equity or otherwise. The Parties may seek to exercise such rights and remedies only in accordance with the procedures set forth in Article 14 (Resolution of Disputes). The Parties may exercise each right and remedy afforded by this agreement or by law from time to time and as often as reasonably deemed expedient by the Party exercising this right. No delay by, or omission of, Developer or Utility to exercise any right or remedy arising upon any event of default of the other Party shall impair any such right or remedy or constitute a waiver of such event or an acquiescence thereto. 10.6 Option to Purchase

If this Agreement terminates because of a Developer Event of Default pursuant to Article 10.4.1, then Utility shall have an option to purchase the Facility (including materials, records, drawings and spare parts). The Parties shall within 14 days of the exercise by a Party of an Option agree to the appointment of a firm of international recognized auditors who shall undertake a due diligence of the Facility for the valuation. 10.7 Survival.

Notwithstanding anything to the contrary contained in this Agreement, where applicable the rights and obligations set forth in this Article 10 shall survive the termination of this Agreement.

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11 FORCE MAJEURE
11.1 Meaning of Force Majeure.

In this Agreement, "Force Majeure" means any event, circumstances, or combination of events or circumstances beyond the reasonable control of a Party that materially and adversely affects the performance by that Party of its obligations or the enjoyment by that Party of its rights under or pursuant to this Agreement, provided that such material and adverse effect has not occurred due to the failure of Developer or Utility to design, finance, construct, own, operate or maintain the Facility, Interconnection Facilities or the Utilitys Grid as required by this Agreement and in accordance with Good Utility Practice. Without limiting the generality of the foregoing, and conditioned on performance of the requirements of Article 11.1.3, "Force Majeure" shall expressly include the following categories of events and circumstances, to the extent that the events or circumstances satisfy the definitional requirements but is not limited to: a) any act of war (whether declared or undeclared), invasion, armed conflict or act of foreign enemy, blockade, embargo, revolution, riot, insurrection, civil commotion, public disorder, act of terrorism, or similar events; b) labor disputes, including strikes, works to rule or go-slow or lockouts, that are not limited to disputes regarding wages, working conditions, and similar matters between the Developer and its employees, but that extend beyond the Facility or are widespread or nationwide or that are of a political, religious or ethnic nature; c) action or inaction of any Public Sector Entity or Governmental Authority (including expropriation, nationalization or compulsory acquisition or acts claimed to be justified by executive necessity); d) acts of God including lightning, fire, earthquakes, volcanic activity, floods, storms, cyclones, tornadoes or tsunamis; e) epidemics or plagues; f) fire, explosions, chemical or radioactive contamination

g) Delay in the delivery to the Developer of a major piece of machinery or equipment that has been timely ordered, but only to the extent that such delay is caused solely by an accident in transportation or results directly from Force Majeure. h) a nationwide shortage of Fuel that prevents the Fuel Supplier from providing adequate deliveries of Fuel to the Facility; i) accidents of navigation or breakdown or injury of vessels, accidents to harbors, docks or other assistances to or adjuncts of shipping or navigation, or quarantine, provided, however, that neither the lack of money or other inability to pay, nor changes in market conditions shall constitute a Force Majeure event. Exclusion from Force Majeure.

11.2

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Force Majeure shall expressly not include the following conditions, except to the extent they result from an event or circumstances of Force Majeure: a) unavailability, late delivery or changes in cost of plant, machinery, equipment, materials, spare parts, or consumables for the Facility; b) a delay in the performance of any Contractor; c) non-performance resulting from normal wear and tear typically experienced in power generation materials and equipment; and d) Non-performance caused by, or connected with, the non-performing Party's (a) negligent or intentional acts, errors or omissions, (b) failure to comply with applicable laws, or (c) breach of, or default under, this Agreement. 11.3.1 Notification and Obligation to Remedy In the event of the occurrence of a Force Majeure that prevents a Party from performing its obligations hereunder (other than an obligation to pay money), such Party shall: (a) notify within [_____________] days the other Party in writing of such Force Majeure; (b) not be entitled to suspend performance under this Agreement for any greater scope or longer duration than is required by the Force Majeure; (c) use all reasonable efforts to remedy its inability to perform and to resume full performance hereunder as soon as practicable; (d) keep such other Party apprised of such efforts on a continuous basis; and (e) provide written notice of the resumption of performance hereunder. Notwithstanding the occurrence of a Force Majeure, the Parties shall perform their obligations under this Agreement to the extent the performance of such obligations is not impeded by the Force Majeure. 11.4 Consequences of Force Majeure 11.4.1 Neither Party shall be responsible or liable for, or deemed in breach hereof because of, any failure or delay in complying with its obligations under or pursuant to this Agreement which it cannot perform due solely to one or more Force Majeure or its or their effects or by any combination thereof, and the periods allowed for the performance by the Parties of such obligation(s) shall be extended on a day-for-day basis for so long as one or more Force Majeure continues to affect materially and adversely the performance of such Party of such obligation(s) under or pursuant to this Agreement; provided, however, that no relief shall be granted to the Party claiming Force Majeure pursuant to this Article 11.4 to the extent that such failure or delay would have nevertheless been experienced by that Party had such Force Majeure not occurred; and provided further, that the Party not claiming Force Majeure may immediately terminate this Agreement without further obligation if Force Majeure delays a Party's performance for a period greater than (a) [___________] consecutive months prior to the Commercial Operations Date or (b) [___________] consecutive months after the Commercial Operations Date.

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11.4.2 During the pendency of an event of Force Majeure Developer shall not be entitled to receive Energy Payment from Utility except for energy already received by Utility prior to the Event. If Force Majeure affects only part of the Facility, then Developer shall be entitled to receive Energy Payment for electrical energy actually delivered to Utility.

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12 INDEMNIFICATION AND LIABILITY

12.1 Indemnity by Developer.

In addition to Developer's obligations and Utility's remedies provided elsewhere in this Agreement, Developer shall indemnify Utility for any loss of or damage to property, death or injury to person, and any other liabilities, damages, losses and reasonable costs and expenses, including, but not limited to, legal fees and expert witness fees or any claim against Utility in respect thereof (collectively, Damages) suffered by Utility as a direct and foreseeable consequence of Developer's conduct, where Utility suffered Damages: 12.1.1 During the design, construction, ownership, operation or maintenance of the Facility and Damages resulted from any negligent act or omission of Developer its servants or agents, and through no fault of Utility its servants or agents; 12.1.2 In connection with, arising out of, or resulting from, any breach of warranty, material misrepresentation by Developer, or non-performance of any term, condition, covenant or obligation to be performed by Developer under this Agreement; and 12.1.3 In connection with any claim, proceeding or action brought against Utility under any applicable national or local environmental laws or regulations, and Damages resulted from Developer's ownership of the site or operation of the Facility; The Developer will hold Utility fully indemnified in respect of the foregoing losses, damages, death, injuries, liabilities, costs and expenses; provided, however, that the Developers indemnities shall not extend to any loss, damage, death, injury, liability, costs or expenses (or any claim in respect thereof) to the extent that they were caused by any act or omission of Utility or the failure of Utility to take reasonable steps in mitigation thereof. 12.2 Indemnity by Utility.

In addition to Utility' obligations and Developer's remedies provided elsewhere in this Agreement, Utility shall indemnify Developer for Damages suffered by Developer, where Developer suffered Damages: 12.2.1 During the design, financing, construction, ownership, operation or maintenance of the Facility and its Interconnection Facilities and Damages resulted from any negligent act or omission of Utility, its servants or agents and through no fault of Developer, its servants or agents; and 12.2.2 In connection with, arising out of, or resulting from, any breach of warranty, any material misrepresentation by Utility or non-performance of any term, condition, covenant or obligation to be performed by Utility under this Agreement.

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Utility will hold the Developer fully indemnified in respect of the foregoing losses, damages, death, injuries, liabilities, costs and expenses; provided, however, that Utilitys indemnities shall not extend to any loss, damage, death, injury, liability, cost or expense (or any claim in respect thereof) to the extent that it was caused by any act or omission of the Developer or the failure of the Developer to take reasonable steps in mitigation thereof 12.3 Notice of Proceedings.

Each Party shall promptly notify the other Party as soon as reasonably practicable after the relevant party becomes aware of any claim or proceeding with respect to which, but for the provisions of Article 12.4, it is entitled to be indemnified under this Article. 12.4 Basket Limitation.

Neither Party shall be entitled to make any claim under this Article until such time as all such claims by the Party exceed [agreed amount] in the aggregate, or until such claim, if not made, would be barred by the statute of limitation, at which time all such claims of that party may be made. When aggregated claims in excess of [agreed amount] have been made, the same rule shall apply with respect to future claims. 12.5 Obligation to Defend.

Each Party on reasonable grounds shall have the right, but not the obligation, to contest, defend and litigate (and to retain legal advisers of its choice for that purpose) any claim, action, suit or proceeding by any third party brought against it, with respect to which the Party is entitled to be indemnified pursuant to this Article 12, with the Partys reasonable costs and expenses of such action subject to said indemnity. The indemnifying Party shall be entitled, at its option, to assume and control the defence of such claim, action, suit or proceeding at its expense and through legal advisers of its choice, if it (a) gives notice of its intention to do so to the Party entitled to indemnification, b) acknowledges in writing its obligation to indemnify that Party to the full extent provided by this Article 12, and (c) reimburses that Party for the reasonable costs and expenses previously incurred by it prior to the assumption of such defence by the indemnifying Party. Neither Party shall settle or compromise any claim, action, suit or proceeding in respect of which it is entitled to be indemnified by the other Party without the prior written consent of the indemnifying Party, which consent shall not be unreasonably withheld. 12.6 Consequential loss

Neither Party shall be liable to the other Party under any theory of liability for any consequential or indirect damages, of any nature whatsoever, arising out of or in connection with the PPA, including loss of use, loss of revenue, loss of profit, loss of contract, loss of goodwill or any other loss or damage of an indirect or consequential nature suffered by the other Party.

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13 INSURANCE
13.1 Insurance Coverage.

At all times during the term of this Agreement, each Party shall obtain and maintain at its own cost insurance coverage for the facilities relating to the Facility within its ownership sufficient to indemnify that party or any successful claimant against loss or damage arising with respect to that facility. Such Insurance shall include the types of coverage usually maintained in respect of facilities of this kind. 13.2 Developer's insurance shall include, but not be limited to: 13.2.1 All Risks Marine Cargo Insurance in an amount sufficient to cover the replacement cost of all plant and equipment shipped to and intended to become part of the Facility on a warehouse to warehouse basis. 13.2.2 All Risks (Property Damage) Operational Insurance in an amount sufficient to cover the replacement cost of the Facility, including construction equipment and transit coverage for plant purchased within Host country and not subject to the insurance described in Article 13.2.1 above and subject to deductibles of no more than [___________] percent of the coverage amount in the case of wind, flood and earthquake and [agreed amount] of the coverage amount in the case of all other perils; 13.2.3 Excess Umbrella Liability Insurance with a single limit of at least amount] per occurrence. [agreed

13.2.4 Comprehensive or Commercial General Liability Insurance with bodily injury and property damage limits of at least [agreed amount] per occurrence, and in the aggregate, and subject to deductibles of no more than [agreed amount]. 13.3 Utility's insurance shall include, but not be limited to:

Utilitys coverage (or self-insurance with Developers consent), which consent shall not be unreasonably withheld) shall include, but not be limited to: [insert desired or negotiated coverages] 13.4 Endorsements.

Developer shall cause its insurers to amend such of its insurance policies as are applicable with the endorsement terms set forth immediately below: 13.4.1 Utility, its directors, officers, and employees are additional insured under this policy 13.4.2 This insurance is primary with respect to the interest of Utility, its directors, officers, and employees and any other insurance maintained by them is excess and not contributory with this insurance

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13.4.3 The following Cross Liability Article is made a part of the policy: In the event of claims being made by reason of (a) personal and or bodily injuries suffered by any employee or employees of one insured hereunder for which another insured hereunder is or may be liable, or (b) damage to property belonging to any insured hereunder for which another insured is or may be liable, then this policy shall cover such insured against whom a claim is made or may be made in the same manner as if separate policies have been issued to each insured hereunder, except with respect to the limits of insurance"; 13.4.4 Notwithstanding any provision of the policy this policy may not be cancelled, renewed or materially changed by the insurer without giving [_______] days prior written notice to Utility. All other terms and conditions of the policy remain unchanged. 13.5 Use of Proceeds of All Risks/Operational Insurance.

The proceeds of any All Risks insurance obtained pursuant to Articles 13.2.1 and 13.2.2 shall, be applied to the repair of the Facility. 13.6 Certificates of Insurance.

Each Party shall on request, cause its insurers or agents to provide the other Party with certificates of insurance evidencing the insurance policies and endorsements required by this Article 13. Failure to deliver certificates of insurance does not relieve the Party in default of the insurance requirements set forth herein. Failure to obtain the insurance coverage required by this Article 13 shall in no way relieve or limit the Party's obligations and liabilities under other provisions of this Agreement. 13.7 Utility Option to Purchase.

If Developer fails to obtain or maintain the policies of insurance as required in Article 13.4, Utility may obtain equivalent policies of insurance. Developer shall reimburse Utility for the cost of such policies within [________] days after notification by Utility and interest shall accrue at the Default Rate if Developer fails to make payment within such [_____] days. Failure of Utility to obtain the insurance coverage required by this Article 13 shall in no way relieve or limit Developer's obligations and liabilities under other provisions of this Agreement, provided that Developer's failure to purchase insurance shall not constitute a default under this Agreement if Utility purchases insurance pursuant to this Article.

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14 RESOLUTION OF DISPUTES
14.1 Mutual Discussions.

If any dispute or difference of any kind whatsoever (a "Dispute") arises between the Parties in connection with, or arising out of, this Agreement, the Parties within [____] days shall attempt to settle such Dispute in the first instance by mutual discussions between Developer and Utility. 14.2 Arbitration 14.2.1 If the Dispute cannot be settled within [___ ] days by mutual discussions, then the Dispute shall be finally settled under the provisions of this Article 14.2. 4.2.2 Subject as hereinafter provided, any Dispute arising out of or in connection with, this Agreement and not settled by Article 14.1 may (regardless of the nature of the Dispute) be submitted by either Party to arbitration and finally settled in accordance with UNCITRAL Rules of International Arbitration. 14.3 Continued Performance. During the pendency of any arbitration (a) Developer shall continue to perform its obligations under this Agreement to, among other things, provide Net Energy Output; (b) Utility shall continue to pay all amounts when due, in accordance with Article 4 (Currency, Payments and Billing); and (c) neither Party shall exercise any other remedies hereunder arising by virtue of the matters in dispute.

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15 GOVERNING LAW
This Agreement and the rights and obligations of the Parties under or pursuant to this Agreement shall be governed by and construed according to the laws of Host Country.21

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16 NOTICES
16.1 Procedure for Giving Notice.

All notices or other communications (together "notices") to be given or made hereunder (including, but not limited to, account information for payments) shall be in writing, shall be addressed for the attention of the person indicated in Article 15.2 below and shall either be delivered personally or sent by prepaid post (with receipt acknowledgment required) or by telex or by fax. Notices given by telex or fax shall be confirmed by a written copy of the notice delivered or sent as prescribed in this Article. The failure to confirm shall not vitiate actual notice. 16.2 Addresses for Notices.

The addresses for service of Parties and their respective and fax number shall be:

1.

For Utility: Attention: Address: Fax No.: Copied to:

2.

For Developer: Attention: Address: Fax No.: Copied to:

A Party may modify its address information by notice provided as prescribed in this Article. The information shown above shall be deemed correct unless and until modified as provided herein.

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17 MISCELLANEOUS PROVISIONS
17.1 Variations in Writing.

All additions, amendments or variations to this Agreement shall be binding only if in writing and signed by duly authorized representatives of both Parties. 17.2 Entire Agreement.

This Agreement and its accompanying Schedules together represent the entire understanding between the Parties with respect to the subject matter of this Agreement and supersede any or all previous agreements or arrangements (whether oral or written) between the Parties with respect to the Facility. 17.3 Waivers. 17.3.1 Limited Effect. No waiver by either Party of any default by the other in the performance of any of the provisions of this Agreement shall: (a) operate or be construed as a waiver of any other or further default whether of a like or different character; or (b) be effective unless in writing duly executed by an authorized representative of the non-defaulting Party. 17.3.2 Indulgences. The failure by either Party to insist on any occasion upon the performance of the terms, conditions or provisions of this Agreement or time or other indulgence granted by one Party to the other shall not thereby act as a waiver of such breach or acceptance of any variation. 17.4 Confidentiality 17.4.1 Treatment of Confidential Information. (a) Each Party shall hold in confidence all documents and other information, whether technical or commercial, relating to the design, financing, construction, ownership, operation or maintenance of the Facility supplied to it by or on behalf of the other Party that is of a confidential nature and is designated as such. The Party receiving such documents or information shall not publish or otherwise disclose them or use them for its own purposes (otherwise than as may be required by the Party, its professional advisers, potential lenders or investors to perform its obligations under this Agreement). (b) The provisions of Article 17.4.1(a) above shall not apply to any information: that is or becomes available to the public other than by breach of this agreement; that is in or comes into the possession of the receiving Party prior to the aforesaid publication or disclosure by the other Party and was or is not obtained under any obligation of confidentiality;

37

that was or is obtained from a third Party who is free to divulge the same and was or is not obtained under any obligation of confidentiality; or that is required by law or appropriate regulatory authorities to be disclosed, provided that the Party supplying the information is notified of any such requirement at least 5 business days prior to such disclosure and the disclosure is limited to the maximum extent possible.

17.4.2 Similar Provisions. For the avoidance of doubt, nothing herein contained shall preclude the use of provisions similar to those contained in this Agreement or other referenced agreements in any agreements prepared and issued in connection with other Facilities. 17.5 Successors and Assigns.

Except where Developer assigns any of its rights to a principal lender whose existence has been disclosed to Utility prior to the Commercial Operations Date, Developer may not assign or transfer its rights or obligations under, pursuant to or associated with this Agreement without the prior written consent of Utility, which consent shall not be unreasonably withheld or delayed. If Utility, on reasonable grounds, objects to the assignment of any of Developer's rights to a principal lender, Utility shall (a) promptly notify Developer of its objection, specifying the reasons for the objection and (b) provide Developer a reasonable opportunity to affect a commercially reasonable cure to the objections. If Developer is unable to cure the objections, Utility may immediately terminate this Agreement. This Agreement shall inure to the benefit of, and be binding upon, the successors and permitted assignees of the Parties. 17.6 No Liability for Review.

No review or approval by a Party of any agreement, document, instrument, drawing, specification or design proposed by the other Party shall relieve the proposing Party from any liability that it would otherwise have had for its negligence in the preparation of such agreement, document, instrument, drawing, specification or design or from the failure to comply with applicable laws with respect thereto, nor shall a Party be liable to the other Party or any other person by reason of its review or approval of an agreement, document, instrument, drawing, specification or design of the other Party. 17.7 No Third Party Beneficiaries.

This Agreement is intended solely for the benefit of the Parties. Nothing in this Agreement shall be construed to create any duty to, standard of care with reference to, any liability to, or any right of suit or action in, any person not a Party to this Agreement. 17.8 Affirmation.22 Developer declares and affirms that it has not paid nor has it undertaken to pay any commission, bribe, pay-off or kick-back and that it has not in any other way or manner paid any sums, whether in currency of Host country or foreign currency and whether in Host country or abroad, or in any other manner given or offered to 38

give any gifts and presents in Host country or abroad, to any person or Developer and, generally, has not made any payment or accepted any gift or in any way whatsoever acted in breach of any obligation, prohibition or requirement of the Corruption Prevention Act, to procure this Agreement. Developer undertakes not to engage in any of the said or similar acts during the term of, and relative to, this Agreement. Utility declares and affirms that it has not paid nor has it undertaken to pay any commission, bribe, pay-off or kick-back and that it has not in any other way or manner paid any sums, whether in currency of Host country or foreign currency and whether in Host country or abroad, or in any other manner given or offered to give any gifts and presents in Host country or abroad, to any person or Developer and generally, has not made any payment or accepted any gift or in any way whatsoever acted in breach of any obligation, prohibition or requirement of the Corruption Prevention Act, to procure this Agreement. Utility undertakes not to engage in any of the said or similar acts during the term of, and relative to, this Agreement.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day, month and year first mentioned above.

Witness Signed for and on behalf of [Insert Legal Name of Developer]

: :

Witness Signed for and on behalf of [Insert Legal Name of Utility]

: :

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18 SCHEDULES Schedule 1- Defined Terms

Definitions: Whenever the following terms appear in this Agreement or the schedules hereto, whether in the present, future or past tense, they shall have the meanings stated below unless the context otherwise requires "Abandonment": Either (a) the cessation of substantially all activities relating to the construction or operation and maintenance of the Facility, as appropriate, or (b) the physical absence, during a period when the Facility is not generating despite adequate renewable energy resources, of substantially all technical employees of Developer and its contractors from the site of the Facility in either case (a) or (b) for at least [____] consecutive hours. This definition does not apply in cases of Force Majeure. Acceptance Tests: means all tests related to the acceptance of the Facility, as specified in Schedule 3 Agreement: This Power Purchase Agreement, including all Schedules thereto, as amended or supplemented from time to time. Allowable Error: means allowable errors in the metering system according to Schedule 5 (Metering) Authorizations: any approval, consent, license, permit, authorization or other permission granted by a Governmental Authority, including Consents and the License; Back-up Metering: means any electrical meters and metering devices installed, owned and maintained by the Developer for backup purposes, used to measure the delivery of Net Electrical Output to Utility; Base Rate: [DESCRIBE BASE INTEREST RATE]. Whenever the Base Rate is applied, the interest shall be compounded [_______], computed for the actual number of Days elapsed on the basis of a 365-Day year. Billing Period: means: a) the period commencing on the Commercial Operation Date and ending on the last day of the Calendar Month in which the Commercial Operation Date occurs; and b) each subsequent period of one Calendar Month ending on or prior to the Termination Date, provided that if the Termination Date occurs other than on the last date of a Calendar Month the final billing period will begin on the first day of the Calendar Month in which the termination Date occurs and will end on the Termination Date.

Business Day: means a day (other than Saturday and Sunday or official public holiday) on which banks are open for business in Host country.

41

Calendar Month: means a period of one calendar month beginning on the first day of such calendar month. Calendar Year: means a Year beginning on 1 January and ending on 31 December of any same year. Change in Law: shall mean (a) the adoption, promulgation, change, repeal or modification after the date of this Agreement of any applicable Legal Requirement (b) the imposition upon the Developer, its Contractors, the Lenders, or a Fuel Supplier of any material condition in connection with the issuance, renewal, extension, replacement or modification of any Authorization after the date of this Agreement that in either case (i) establishes new requirements for the construction, financing, ownership, operation or maintenance of the Facility that are materially more restrictive than the most restrictive requirements in effect as of the Effective Date or (ii) has a material and adverse effect on the Developer, the Facility or the return (net of tax) to the Investors of the Developer; "Commercial Operations Date: The date on which the Facility actually and successfully completes the test operations required by Schedule 3 (Commissioning Requirements). Commissioning: taking all steps necessary to put the Facility into operation including carrying out tests prior to operation Construction Contract: The agreement to be entered by the Developer for the design, manufacture, construction and commissioning of the Facility Construction Period: means the period from the date of start of construction to the declared Commercial Operation Date; Confidential Information: is defined in Article 17.4; Consents: All such approvals, consents, authorizations, grants or certificates of registration, notifications, concessions, acknowledgments, agreements, licenses, permits, decisions or similar items required to be obtained from any Public Sector Entity or other relevant governmental entity for the Developer or for the construction, financing, ownership, operation and maintenance of the Facility23 Contractor: any person with whom the Developer enters into an EPC Contract or an Operating and Maintenance Agreement and each such persons sub-contractors of any tier, and each of their successors and permitted assigns; Control Center : Utility's system control center located at [LOCATION] in Host Country, or such other control center designated by Utility from time to time (but not more than one at any time) from which Utility shall Dispatch the Facility Day: The 24-hour period beginning and ending at 12:00 midnight in [HOST COUNTRY TIME]. Default: as defined in Article 10; Default Rate: The Base Rate plus [_____] percent per annum. Whenever the Default Rate is applied, the interest shall be compounded [______], computed for the actual number of Days elapsed on the basis of a 365-Day year. 42

Delivery Point(s): shall be in accordance with Schedule 4 (Interconnection Facilities) Dispatch: The instructions issued by Utility from the Control Center in accordance with this Agreement for the Developer to schedule and control the generation of the Facility in order to increase or decrease the electricity delivered to the Utility Grid System. Dispute: The meaning ascribed thereto in Article 14. "Emergency" : A condition or situation that, in the reasonable opinion of Utility, does materially and adversely, or is likely materially and adversely to (i) affect the ability of Utility to maintain safe, adequate and continuous electrical service to its customers, or (ii) endanger the security of person, plant or equipment "Energy Price:The price Utility will pay Developer per kWh for Net Energy Output delivered to the Utilitys Grid, as determined in accordance with Schedule 2. Energy Not Served (ENS): means the amount of Energy in MWh that could not be supplied or could not be distributed due to failures of the Developer or Utility and as defined in Schedule 2 "Facility" : All facilities on the Developer's side of the Interconnection Point at the facility described in the first Whereas clause of this Agreement that are required to provide the Net Energy Output to the Utilitys Grid and necessary for the Developer to honor its obligation under the terms and conditions of this Agreement "Forced Outage: An immediate full or partial interruption of the generating capability of the Facility that is not the result of (i) a request by Utility in accordance with this Agreement , (ii) a Scheduled Outage or a Maintenance Outage or (iii) an event or occurrence of Force Majeure: "Force Majeure: An event or occurrence specified in Article 11 (Force Majeure). Functional Specification: the functional specifications of the Facility as described by the suppliers of parts of the Facility; Government: The lawful government of the country in which the Facility is located. Implementation Agreement: The [DESCRIBE FULL NAME AND DATE OF IMPLEMENTATION AGREEMENT] entered into between Government and the Company. "Interconnection Facilities" : The facilities that interconnect the Facility to the Utilitys Grid. This includes all of the equipment that measures capacity and energy output from the Facility, as well as the associated protection equipment specified in Schedule 4 (Interconnection). "Interconnection Point" : The physical point(s) where the Facility and the Utilitys Grid are connected as specified in Schedules 4 (Interconnection) and 5 (Technical Specifications) kW : Kilowatts. kWh : Kilowatt-hours Law : Any law, act, requirement (including license and permit requirements), ordinance, code, order, rule, resolution or regulation of any governmental authority or agency (federal, 43

national, provincial, municipal, local or other) that is at any time applicable to the Developer, the Facility, the Site, or any part thereof, and shall include the Laws of Host Country and all applicable environmental standards and hazardous waste laws, as any such law, act, requirement, ordinance, rule, resolution or regulation or standard may be amended from time to time. Laws of Host Country : The national, provincial and local laws of Host Country all orders, rules, regulations, executive orders, decrees, policies, judicial decisions, notifications or other similar directives made pursuant thereto, as such laws, orders, rules, regulations, decrees, policies, judicial decisions and notifications or other similar directives may be amended from time to time. Liquidated Damages: as defined in Schedule 2 "Liquidator" : Person duly appointed by a Court, members or shareholders of Developer or Utility, or creditors of Developer of Utility for the purpose of winding up, respectively, Developer's or Utility's operations. Loss: means any loss except consequential losses, damage, liability, payment, obligation, claim, action, cost or penalty or expense related thereto (including reasonable legal fees) Maintenance Outage : An interruption or reduction of a Unit's or the Facility's generating capability that (a) is not a Scheduled Outage; (b) has been scheduled and allowed by Utility (c) is for the purpose of performing work on specific components, which work could be postponed by at least [_____] Days but should not be postponed until the next Scheduled Outage. "Metering System : All meters and metering devices or equipment owned by Utility or Developer and used to measure the delivery and receipt of Net Energy Output from the Facility. Minimum Functional Specifications : The minimum functional specifications (including the technical limits of the Facility) for the construction and operation of the Facility as set forth in Schedule 2 hereof. Month : A calendar month according to the Gregorian calendar beginning at 12:00 midnight on the last day of the preceding month and ending at 12:00 midnight on the last day of that month. MVAR : Megavars. MW: Megawatts. 'Net Energy Output" :Net energy delivered by Developer for sale to Utility at the agreed Interconnection Point as measured in accordance with Article 7.3 (Measurement of Net Energy Output) and the general terms and conditions of the agreement. Notice of Default: The meaning ascribed thereto in Article 10.

44

"Operating Committee" : Such persons as appointed by Utility and Developer for the purpose of coordination and implementation of this Agreement and the operations of the Facility as set forth in Schedule 7. Operating Year: a period of one (1) year beginning on the Commercial Operation Date specified or any anniversary thereof; Public Sector Entity : The Government and any subdivision thereof, any provincial or local governmental authority with jurisdiction or authority over the Developer, the Contractors, the Lenders or the Facility or any part thereof, any department, authority, instrumentality, agency or judicial body of the Government or any such provincial or local governmental authority, and any court, tribunal or independent regulatory agency or body in Host Country having jurisdiction over the Developer, the Contractors, the Lenders or the Facility or any part thereof. "Prudent Utility Practice" : The practices generally followed by the electric Utility industry in North America with respect to the design, construction, operation, and maintenance of electric generating, transmission, and distribution facilities, including, but not limited to, the engineering, operating, and safety practices generally followed by such Utility industries; provided that such practices must be relevant and applicable to the management and operation of a Wind Farm. Reactive Power : The wattless component of the product of voltage and current, which the Facility shall provide to or absorb from the Utility Grid System and which is measured in MVAR "Relevant Consents" : Any approval, consent, authorization or other requirement that is required from the Government or any public sector entity under the applicable Laws of the Government for Developer with respect to the Facility. "Required Commercial Operations Date": The date by which the Facility must successfully complete the required test operations prescribed in Schedule 4 (Testing and Commissioning).24 That date is agreed to be [commercial operations deadline for Facility] "Scheduled Outage" : A planned full or partial interruption of the Facility's generating capability that (i) is not a Forced Outage; (ii) has been scheduled and allowed by Utility in accordance with Article 8.4 and (iii) is for inspection, testing, preventive maintenance, corrective maintenance or improvement of the Facility. Utilitys Grid : Utilitys system of transmission or distribution facilities on Utility's side of the Interconnection Point, through which Net Energy Output of the Facility will be distributed by Utility to users of electricity. Year : Each twelve (12) Month period commencing on 12:00 midnight on December 31 and ending on 12:00 midnight the following December 31 during the term of this Agreement.

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Schedule 2- Calculation of payments

This schedule defines the calculation of the specified payments and other monetary values that may be required by the provisions of this Agreement. In particular, it defines: the calculation of the payments by Utility to Developer for Net Energy Output of the Facility, including adjustments to the base price during the term of this Agreement; and the calculation of liquidated damages payments. This Schedule 2 is divided into three Articles: 2.1 2.2 2.2 Prices and Adjustments Liquidated Damages Calculations Currency Risk and Other Conditions

The table headings indicate the particular payments and periods to which the calculations and adjustments apply. 2.1 Prices and Adjustments

Payment by the Utility consists of: 1) Capacity Charge (if applicable); 2) Output Charge; The Capacity Charge is composed of two components: 1) Capital Recovery Charge 2) Fixed Operations and Maintenance Charge The Capital Recovery Charge covers the costs linked to the Developer's investment in the Facility, and includes (but is not limited to) debt service, equity return and taxes. The Fixed Operations and Maintenance Charge covers the Developer's fixed costs for operating and maintaining the Facility. In addition to overheads, it includes fixed plant operation costs, maintenance, spare parts, insurance, and similar expenses. The Output Charge covers the electrical energy production costs that vary with the production level. It is proportional to the level of Net Energy Output dispatched by the Utility and measured by the Metering System. It includes two components: 1) Variable Fuel Charge (if applicable) 2) Variable Operations and Maintenance Charge The Variable Fuel Charge covers the consumption of Fuel to generate electrical energy. The Variable Fuel Charge is obtained by multiplying the Net Output (MWh of electricity) by the relevant Variable Fuel Charge Rate. The Variable Fuel Charge Rate is adjusted to reflect changes in the price of Fuel pursuant to the Fuel Supply Agreement. The Variable Operations and Maintenance Charge covers the Developer's costs, for operating and maintaining the Facility, which are proportional to the level of Net Output, including, but not limited to, consumables, personnel, variable spare parts and services. 46

Prices shall be as shown in the following table. Adjustments to this price shall be made when and on the basis shown in the following table.

Component

Unit

Base Price

Adjustment Basis

Adjustment Frequency

Capital Recovery Charge Fixed Operations and Maintenance Charge Variable Fuel Charge (if applicable) Variable Operations and Maintenance Charge

USD/month USD/month

USD/kWh

USD/kWh

When the capacity charge is not applicable only an Output Charge will apply. The output charge will in that case be determined at USD [______] per kWh. This tariff will increase year by year with a percentage of 25% equal to the Consumer Index Price change.

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2.2

Liquidated Damages Calculations 2.2.1 Developer

Commercial Operation Delays by Developer. Liquidated damages for each calendar month are determined as follows: 2.2.1.1 Liquidated damages for any failure to meet the Required Commercial Operations Date shall be payable [agreed currency] and shall be [Insert agreed daily liquidated damages amount] for each day or part thereof by which the Commercial Operations Date is delayed beyond the Required Commercial Operations Date, for the first 45 days after the Required Commercial Operations Date. For delays in excess of 45 days, liquidated damages shall be [Insert agreed daily liquidated damages amount] pIus [Insert adder] for each day or part thereof by which the Commercial Operations Date is delayed beyond 45 days after the Required Commercial Operations Date. The cumulative amount of liquidated damages for failure to meet the Required Operations Date shall not exceed [Insert maximum liquidated damages amount]. 2.2.1.2 If portions of the Facility have successfully completed the required test operations prescribed in Schedule 4 (Commissioning Requirements) and partial generation is available, then the liquidated damages payments shall be reduced by the percentage of the total number of generating units in the Facility that have successfully completed the required test operations prescribed in Schedule 4 (Commissioning Requirements). 2.2.1 Utility

The amount Energy Not Served (ENS) due to Utility The amount of electricity (MWh) that could not be supplied due to shortage of available capacity or failures at the Grid. The ENS will be calculated in the following way: The Energy Not Served will be calculated as the required electricity minus the actual delivered electricity by the Developer. The required electricity will be considered equal to the load on the same time of the same day of the week before, provided a normal supply of electric energy was possible. If the same time of the same day of the week before does not represent a normal supply of electricity a day and time will be selected from the most recent supply available. Optional: If curtailment of Energy Take by Utility leads to an Energy Take below the defined minimum as defined in Article 2.2 of the Agreement, Developer is entitled to charge the amount of not taken energy according to [Different arrangements for settlement can be considered by parties]

2.3.

Currency Risk and Other Conditions 2.3.1 Currency Risk Adjustment 48

[Insert provision detailing the negotiated allocation of the risks of changes in the relative values of the currencies used by the Parties in the regular course of business or by suppliers of significant Facility inputs]. 2.3.2 Discontinuation of Index.

If any index used in this Schedule is no longer published or otherwise becomes unavailable, either Party may serve notice on the other Party and the Parties shall use their best efforts to agree upon a new index within 30 days of the notice being served. No adjustment shall be made until the new index is agreed upon, and once agreement is reached adjustments shall be made back to the time the previous index became unavailable and the amounts owing to either party included on the next statement due for payment.

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Schedule 3-Testing and commissioning

This schedule is a technical document that necessarily varies from Facility to Facility. It must take account not only of the characteristics of the renewable energy technology being utilised, but also the capabilities and limitations of the Facilitys design and equipment. The specific testing steps and the test criteria must be negotiated by the Developer and Utility with the specific design, equipment, and operational characteristics of the Facility and the Utilitys Grid taken into account.

Developer shall, at its own expense, carry out the testing and commissioning of the Facility and the connecting transmission infrastructure in accordance with the provisions of this Schedule 4, the specifications set out in Schedule 6 (Technical Specifications), and Prudent Utility Practice. Utility shall be given 5 days prior written notice of any testing or commissioning procedure and Utility shall be entitled to have representatives present for purposes of observing any such procedures. If Utility representatives are unable to attend for any reason, the testing may proceed without them. 3.1 Test prior to initial commercial operation (such as Initial tests, Energizing tests, Synchronizing tests but not limited to) (details to be agreed) 3.2 Testing and guarantees such as Acceptance and Performance tests, Reliability tests, Capacity tests, Net Electrical Output Tests but not limited to) (details to be agreed) 3.3 Testing of Interconnection Facilities and Transmission Line such as testing of transformers, cables, protection and monitoring equipment, communication equipment, transmission lines and etc. but not limited to (details to be agreed) 3.4 Testing of Metering system (details to be agreed)

Schedule 4- Interconnection facilities

This schedule is a technical document that necessarily varies from Facility to Facility and from utility to utility. The technical specifications that would be set out in this document must take account of the characteristics of the specific Facility being connected to the grid and of the technical and operating characteristics of the connecting utilitys grid.

50

The specifications set out below are merely illustrative. They are provided to illustrate the nature and scope of matters that would be covered in the technical specifications.

4.1

Developers Interconnection Facilities 4.1.1 4.2.1 The Interconnection Point or Delivery point will be [_____________} Developer will design, procure, construct and install the Interconnection Facilities including all switchgear, power transformers, interconnection lines which can be overhead lines, underground cables or submarine cables, equipment buildings and foundations, line foundations, steel work, the manual disconnect switch, grounding system, current and potential transformers, auxiliary systems, data transfer and data communication facilities, all in accordance with general requirements as approved by Utility. All facilities as described above and as required between the Interconnection Point and Utilitys facilities shall be designed, procured, constructed and commissioned by Developer at its expense. Each Party shall own, operate and maintain all the facilities on its side of the Interconnection Point.

4.1.3

4.2

Utilitys responsibilities 4.2.1 Utility will use its best endeavor to assist the Developer in obtaining, in a timely manner and at a reasonable cost, all permits, permissions and way leaves necessary for the construction of the Interconnection Facilities and associated equipment. Such assistance shall not be unreasonably withheld. The reasonable expenses of Utilitys assistance shall be the responsibility of Developer. Utility will be responsible for the design, construction, installation, commissioning and testing of any new transmission lines (and associated switchgear and protective devices) needed to connect the Facility to Utilitys Grid. Utility shall own, operate and maintain the line and associated equipment.

4.2.2

4.2

Operation and Maintenance 4.2.1 Developer shall, at its own expense, operate and maintain, interconnecting equipment (as described in 4.1 of Schedule 4) on the Developer's side of the interconnect point. Developer may not modify or replace the interconnection equipment described in 4.1 of Schedule 4 above without the prior written consent of Utility. Developer should take into account that the interconnection will be connected to the existing Electrical System of Utility where existing standards and procedures are in place and as such the Developers Operational and Safety Issues should be adapted to the existing situation at Utility. This also includes that next to following the existing Utility procedures the Developers 51

4.2.2

personnel in charge with operating and switching of equipment in the Developers Electrical System should be trained and certified similar to operational personnel at Utility. 4.3 Interconnection Protection and Control 4.3.1 Developer shall coordinate its protection scheme and protective relay settings with Utility, and the protective relay settings shall be subject to Utility approval. The protection system shall be provided by Developer: Utility' System Protection and Control Department shall approve the final design of Developers interconnection protection scheme for the Facility and the transmission facilities connecting the Facility to Utilitys [_______] Substation. Utility will provide its requirements of data communication with the Facility for the purpose of monitoring and control of the Facilitys connection to Utilitys grid.

4.3.2

4.3.3

4.4

Testing and Commissioning of the Connection Equipment

The connection equipment and transmission lines shall be tested and commissioned in accordance to Schedule 3

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Schedule 5- Metering
5.1 Metering Equipment and Accuracies

The Developer shall design, finance, construct and install the Metering System and shall design, finance, construct, install, own, operate and maintain the Backup Metering System. The Metering System shall be owned, operated and maintained by Developer The Metering System and the Backup Metering System (each, a "meter" and together, the "meters") shall each meet the following specifications at all times during the term of this Agreement. 5.1.1 The Metering System owned by Developer shall be constructed to accumulate the outputs and/or inputs as measured at the [agreed measurement point] of the Interconnection Facility connecting the Facility to the Utilitys Grid. 5.1.2 The Metering System shall measure on a daily basis active and reactive energy in both directions. The accuracy of the Metering System components shall be: o o o o voltage and current transformers: class 0.2 kWh meter: class :0.2 kVArh meter: class 2 Maximum voltage deviation caused by wiring : magnitude 0.02% , angle 1 minute

5.1.3

All metering and accumulating equipment shall have sufficient accuracy so that any error resulting from such equipment shall not exceed the lesser of [agreed percentage %] of full-scale rating or the equipment manufacturers stated maximum tolerable error level (the Allowable Error).

5.1.4

Both meters shall be constructed with a capability to be read remotely through a communication line. Both Parties shall have the right to read either meter. Both meters shall have provisions to record the accumulated kilowatt-hours and other parameters as indicated in this Schedule 5 for each demand interval with identification of time and date.

5.2

Sealing, Field Testing and Inspection 5.2.1 The Developer and the Utility prior to the Performance Testing (Schedule 3) shall be present during accuracy/calibration tests on the Metering System, by the equipment makers representative. The test equipment will have been checked by an accredited test facility within 6 months supported by a certificate from the testing agency. The Developer shall provide at least five (5) days notice of such testing and Utility shall have the right to have a 53

representative present at such test at its own expense. Thereafter Developer at its sole expense may test the Metering System at intervals of not less than twelve (12) months apart, or as frequently as Developer desires, after giving the Utility sufficient notice but in no case less than forty eight (48) hours advance notice. Utility may have a representative present during any such testing, as well during any inspection as well as during inspection of the Metering System or adjustment thereof. 5.2.2 Developer shall test the Metering System at any other time reasonably requested by the Utility. Utility shall compensate the Developer for such additional testing, provided however if the test indicates that the Metering System when referred to datum is inaccurate by the more than zero point three percent (0.3%) then Developer will pay for the additional test. Utility may have a representative present during any such testing, as well as during any inspection of the Metering System or adjustment thereof. After any testing or recalibration of the Metering System, the Metering System shall be sealed in the presence of both Parties. Repair, Replacement or Recalibration of Metering System. When any component of the Metering System is found to be outside the specified limits of accuracy or otherwise not functioning properly, the Developer shall forthwith repair, re-calibrate, or replace such component of the Metering System at its expense. Upon the completion of any examination, maintenance, repair or re-calibration of, or replacement of any component in the Metering System, the Metering System shall be sealed in the presence of both Parties. Seals shall not be broken by anyone except Developers personnel when either meter is to be inspected, tested or adjusted. Developer shall notify Utility in advance of such inspection, testing or adjustment, and Developer shall be allowed to have a representative present. Utility shall test both meters within 10 days after (a) the detection of a difference larger than the Allowable Error in the readings of the meters, (b) the repair of all or part of a meter caused by the failure of one or more parts to operate in accordance with the specifications; and (c) each anniversary of the Commercial Operations Date. If any errors in the readings of the meters are discovered by such testing, the party owing that meter shall repair, recalibrate or replace the meter and shall give the other Party reasonable advance notice so that the Party receiving notice may have a representative present during any such corrective activity.

5.2.3

5.2.4

5.2.5

5.2.6

5.3

Measurement of Net Energy Output

If the Metering System is found to be inaccurate by more than the Allowable Error or to otherwise have functioned improperly during the previous Month, then the correct amount of

54

Net Energy Output for the actual period during which inaccurate measurements, if any, were made shall be determined as follows: 5.3.1 First, the reading of the Backup Metering System shall be utilized to calculate the correct amount of dependable capacity and Net Energy Output, unless a test of such Backup Metering System, as defined in Article 7.1, which may be required by either Party, reveals that the Backup Metering System is inaccurate by more than the Allowable Error or is otherwise functioning improperly. If the Backup Metering System is not within the acceptable limits of accuracy or is otherwise functioning improperly, then Developer and Utility shall jointly prepare an estimate of the correct reading on the basis of all available information and such guidelines as may have been agreed to between Developer and Utility at the time the reading is taken. If Utility and Developer fail to agree upon an estimate for the correct reading, then the matter may be referred by either Party for determination by arbitration pursuant to Article 14 (Resolution of Disputes) of this Agreement.

5.3.2

5.3.3

Developer shall provide and install appropriate equipment and shall make a continuous recording on appropriate magnetic media or equivalent of the Net Energy Output of the Facility prior to the Commercial Operations Date and thereafter. A copy of this recording shall be provided to Utility each time the meters are read. 5.4 Parameters and Procedures for Meter Reading

The following parameters shall be read and recorded each month for each demand interval. Active energy (MWh) OUT Active energy (MWh) IN Reactive energy (MVARh) OUT Reactive energy (MVARh) IN Active power demand (MW) OUT Active power demand (MW) IN Reactive power demand (MVAR) OUT Reactive power demand (MVAR) IN

The demand interval shall be thirty (30) minutes and shall be set to start at the beginning of the hour. Demands shall be calculated by averaging the respective parameters over the stated demand interval. Utility shall read the appropriate meter and the demand register shall be reset on the last day of each month at a time to be agreed by the Operating Committee established pursuant to Article 8.8 (Operating Personnel).

55

As a backup to the manual records of the demands actually experienced throughout the month, both meters shall be equipped with a memory module of sufficient size which will record the MWh and MVARh produced during each demand interval.

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Schedule 6-Technical specifications

This schedule is a technical document that necessarily varies from Facility to Facility. It must take account not only of the characteristics of the renewable energy technology being utilized, but also the capabilities and limitations of the Facilitys design and equipment. Specific equipment specifications (and associated electrical characteristics) and applicable performance standards for that equipment must be agreed upon by Developer and Utility with the design, equipment, and operational characteristics of the Facility taken into account. The specifications set out below are merely illustrative. They are provided to illustrate the nature and scope of matters that would be covered in the technical specifications.

6.1

Description of the Facility General description such as type of power generation, plant configuration and requirements, if needed fuel supply, location, ambient and reference conditions, gross performance, net output, internal consumption, ratings Capacity of the Facility at reference conditions, performance curves, partial load curves, power factor, losses at different power factors etc. Design data of diesel engines, biomass plant, wind turbines, solar panel arrays, heat recovery systems, steam turbines and condenser, solar panels, generators Telecommunications and interface with control centre of Utility Power station electrical and control system, protection systems, switch gear, generator protection system Circuit breakers and transformers Installation and coordination with Utility to implement the interconnection. All civil works shall be designed to meet all local and governing codes. Fencing to surround the switchyard to protect bystanders. The fence will have all applicable grounding to meet local and governing codes. All the equipment in the Facility shall be constructed of new material and shall be designed to last at least twenty (20) years. Developer shall furnish the Facility design details to Utility when the design is complete. Reliability

6.2

A high standard of reliability and availability is required from the Facility and the individual components. In the case of intermittent renewable energy sources the availability has to be predicted by Developer as indicated in Article 8.4 of the Agreement, by means of daily predictions of the Facilities output and 12 months predictions of power delivery. 6.3 Codes and Standards 57

All individual components of the Facility shall be constructed, installed and tested in accordance with the current edition at the time of construction of the following codes and standards (or their international equivalents) and Prudent Utility Practice. (different per utility) ACI ANSI ASCE ASME ASTM AWS UL IEEE ISO NBS NEC NEMA NESC NETA NFPA SSPC IEC America Concrete Institute America National Standards Institute American Society of Civil Engineers American Society of Mechanical Engineers Performance Test Codes American Society for Testing Materials American Welding Society Underwriters Laboratory Institute of Electrical and Electronic Engineers International Organization for Standards National Bureau Standards National Electric Code National Electrical Manufacturers Association National Electric Safety Code National Electric Testing Association National Fire Protection Association Steel Structures Painting Council International Electrotechnical Commission

6.4

Operation Requirements

The Facility shall be designed so that construction, operation and maintenance should be possible without adversely affecting the operations of Utility. The Facility shall be capable of operating in parallel with the Utilitys Grid. 6.5 Design Limits Developer shall have equipment that will allow it to supply its reactive power (MVARs) requirements and simultaneously supply capacity and energy to the Utilitys Grid with a power factor of 0.9 lagging. The supply shall be able to operate at frequencies between [__________] hertz, provided that Developer has the right to separate from the Utilitys Grid, without any liability to Utility, if a) Developer is required to furnish power to the Utilitys Grid operating at [___] hertz for one second, or b) When Developer is receiving power from Utility, the frequency falls to [____] hertz. The voltage at the Interconnection Point shall be maintained at [____] +/- 5%. Voltage fluctuations may be noticeable as visual lighting variations (flicker) and can damage or disrupt the operation of electronic equipment. IEEE Standard 519 and IEC 61000-3 provide definitions and limits on acceptable levels of voltage fluctuation. Loads or system connections to the Utilitys Electrical System shall comply with the limits in these standards. As a special requirement for wind farms the fault ride through capability of the wind turbines will be defined in a graph showing voltage dips during a defined period in msec. Power quality

58

Design considerations should include applicable standards including, but not limited to IEEE Standards 142, 519, 1100 1159, 1547, and ANSI C84.1. Harmonic distortion has to be compliant with IEC 61000-2-12. Reactive power Each entity shall provide for its own Reactive Power requirements, at both leading and lagging Power Factors unless otherwise specified by parties. Utility might require Developer to minimize exchange of Reactive Power with Utilitys system, especially under peak load conditions. This can be accomplished by installing equipment to allow matching of internal supply and demand of Reactive Power. Developer shall advise Utility of any operating constraints and limits, which may from time to time, apply to the Facility. Environmental Requirements

6.6

The design, construction and operation of the Facility shall comply with all applicable national and local laws and regulations of the relevant Government authorities. Developer shall provide proof of compliance with these laws and regulations. 6.7 Security

Developer shall, at its own expense, equip the Facility with appropriate lighting and security systems. 6.8 Safety

Developer shall comply with all ordinances and regulations regarding safety on the Facility including, but not limited to, Prudent Utility Practice. The Parties agree that Utility personnel entering the plant will adhere to all safety, drug and alcohol constraints that the Developer requires. Developer will provide safety training and guidelines for Utility personnel with respect to this requirement.

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Schedule 7- Operating Committee

7.1 Appointment of Committee.

Within 5 days of the date of this Agreement, the Parties shall form an Operating Committee for day-to-day management of the Interchange Agreement. Each Party shall appoint [even number] representatives and an alternate for the Operating Committee. Within 14 days of the date of this Agreement, each Party shall provide to the other Party notice of the appointment of its Operating Committee representatives and their particulars. The first meeting of the committee shall be convened no later than 2 weeks after the final appointment. The committee shall maintain and adopt an appropriate record of its deliberations, which record shall in the event of a dispute constitute conclusive evidence of the decisions taken in respect of the subject matter therein. 7.2 Responsibilities.

The Operating Committee shall be responsible for (a) coordinating the construction schedules of each Parties portion of the Facility, the Interconnection Facilities and any required modifications to the Utility Grid, and (b) ongoing coordination of areas of mutual interest and concern involving the Facility and the Interconnection Facilities. Without limiting the generality of the foregoing duties, the Committee shall: Coordinate the respective programs of the Parties for the construction, commissioning and testing of facilities and equipment, and the respective commissioning procedures; Develop steps to be taken on the occurrence of any event of Force Majeure, or the shutdown or reduction in capacity for any other reason of the Facility or the Interconnection Facilities; Coordinate the scheduling of maintenance affecting the operations of the Facility; Coordination of changes in either the Facility or the Interconnection Facilities to effect the operational requirements of Utilitys control of Utilitys Grid; Develop operating procedures, including plans for operating the Facility during anticipated types of Emergencies (Article 8.4). Address safety matters affecting the Parties, their contractors and their respective employees as related to the Facility and the Interconnection between the Facility and the Utility Grid; Recommend to the Parties changes regarding the responsibilities of the Operating Committee. 7.3 Procedures. `

The Operating Committee shall only act by unanimous agreement. The Committee shall develop and implement written policies regarding the frequency of meetings and minutes of

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meetings. The Operating Committee shall not have authority to modify or alter the rights and obligations of the Parties under this Agreement. 7.4 Reporting Relationships. The Operating Committee shall report their activities and recommendations to the Parties or others designated by the Parties

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Endnotes

Energy. If less than the total electrical energy output of the Facility is committed under the

agreement, the agreement should specify the contracted amount. Capacity. The nature of renewable energy projects often means that only the energy output of the Facility is purchased. If the Facilitys electrical production capacity is also the subject of the agreement, a reference to the contracted capacity should be added. Sales of capacity from renewable energy projects can be feasible through coordinated operation of an aggregation generating units using todays sophisticated renewable energy technologies. If the contract is for the full output of the Facility or a fixed amount that approximates the maximum output, the Facility capacity may be used as a ceiling. If less than the full output of the Facility is contracted, the agreement should specify a minimum take amount, as well as the maximum, in the capacity or energy units on which payments will be based. This Agreement contemplates a take or pay arrangement, under which Utility is obligated to take the contracted, regardless of circumstances, or pay for the energy Developer was prepared to deliver. As drafted, this provision allows either Party to seek an extension of the agreement on the existing terms. The other Party may reject that request, leaving the Parties to establish a new agreement on new, negotiated terms, or to seek other counterparties. Alternatively, if the initial term is short and future cost and price trends are not entirely speculative, the Parties could negotiate escalated (or otherwise adjusted) terms to take effect upon extension of the agreement.
4
3

Currency risk can have a worrisome adverse effect on a small developer if the relative valuations of the currency in which the developer is paid and those in which it must pay its invoices --

e.g., to suppliers and equipment manufacturers -- change significantly after the PPA terms have been negotiated. This template agreement provides for an agreement on the currency for payments, and it incorporates a placeholder provision, for further adjustment, in Schedule 2 (Calculation of Payments).
5

The proxy would likely be (or be derived from) a regularly published and verifiable interest

rate from an independent source

6

Often Commissioning of the Facility is done in stages as generating units come on line. This is beneficial to Utility because it is able to get firm capacity from the Developer at an earlier date. On the other hand, Utility must also begin making Energy Payments prior to the Commercial Operations Date. As stated above, for purposes of this Agreement, we have assumed that the Facility will not be built and Commissioned in successive stages but, instead, will come on line as a single, integrated facility. In the event that the Parties do wish to build and Commission the Facilitys generating units in sequential order, this concept would need to be reflected throughout the entire Agreement. For instance, Utility would likely establish a Required Commissioned Date for each Unit and the Developer would be liable for liquidated damages in the event that each Unit was not Commissioned before its Required Commissioned Date.

Parties to a power purchase agreement will often determine that it is in their respective interests to provide for the sale by the Developer, and purchase by Utility, of test energy from the Facility prior to the Commercial Operations Date. Otherwise, there would be no payments made to the Developer prior to the Commercial Operations Date.
8

In order to ensure that the Developer is able to maintain some degree of control with respect to

observation or inspection visits made by Utility, the Developer is likely to insist on adding a provision

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similar to the following to this Article:. All persons visiting the Facility on behalf of Utility shall comply with the reasonable instructions and directions of the Developer or its Contractors. The commercial terms regarding the Metering System often vary from power purchase agreement to power purchase agreement. For instance, in some power purchase agreements, the Utility rather than Developer may have the responsibility for procuring, owning and operating the Metering System. Similarly, in regards to Article 7.1 and 7.2, Utility not the Developer may be responsible for installing and testing the Metering System (especially if Utility owns and operates the Metering System). In the event that a Backup Metering System is not required, a provision such as the following can be added: Nothing in this Agreement shall prevent the Developer from installing, owning, and maintaining meters and metering devices for backup purposes (Backup Metering System). In some power purchase agreements, the Utility might have the primary responsibility for testing the Metering System or the Backup Metering System. Whichever Party has this responsibility, the other Party would customarily be entitled to advance notice of any testing and allowed to have one of its representatives present during any such testing. As with the testing of the Metering System, the Utility rather than Developer might have the primary responsibility for reading the Metering System. The telecommunications equipment to be provided by the Developer is typically set forth in a Schedule to the Agreement (in this Agreement, Schedule 5). Such equipment normally would include telemetering and data interface equipment, a PBX or similar system to permit voice communications between the Facility and the Control Centre and telecopying equipment. The nature of renewable energy projects means normally that only the energy output of the Facility is purchased and electrical production capacity is no subject of the agreement. In case besides Net Electrical Output and also the Dependable Capacity can be part of the Agreement. In that case the Utility have to pay a monthly tariff/ charge for the available capacity and the Net Electrical Output. These situations are occurring for large power plants based on fossil fuels such as coal, oil or gas fired power plants.
15
14 13 12 11 10 9

Utility may want the Developer to plan Scheduled Outages outside of certain Peak Months

designated by Utility. Furthermore, depending on the number of Units comprising the Facility, Utility may want the Agreement to provide that the Developer may only take one Unit off-line at a time for scheduled maintenance. While, as provided in this provision, Utility will wish to limit the number of Scheduled Outages the Developer is entitled to take in a given Operating Year, the Developer will want to ensure that it is entitled to a sufficient number of Scheduled Outages in order that it may properly maintain the Facility without suffering any liability to Utility. The Developer may need additional Scheduled Outages in Operating Years during which extensive maintenance must be performed on the Facility. How frequent major maintenance must occur is dependent on a number of factors, including the type of technology used, the fuel used, the manufacturer and model type, load profile and ambient conditions.
17 16

In the event that Utility requests that the Developer reschedule a Scheduled Outage, the

Developer will need a reasonable amount of advance notice. Otherwise, the Developer may incur costs because it may have entered into a contract to have the scheduled maintenance performed prior to the rescheduling.

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18

This provision gives the Utility the greater number of committee members and may provide

greater comfort for that reason. In certain Host Countries, the applicable environmental laws and standards may not be welldeveloped, and Utility may prefer to use other environmental standards, such as those issued by the World Bank. The Lenders may also impose their own standards on the Developer, but these requirements would typically be included in the Loan Documents rather than in this Agreement. The Developer may wish to limit the applicability of Article 10.1.4 by inserting a provision stating that it shall not be a Developer Event of Default if the Abandonment by the Developer resulted from a situation which presented a physical threat to persons or property or the security, integrity or reliability of the Facility. The Developer may request that the Agreement be governed by English law or laws of the State of New York, especially if Utility is Government-owned or -controlled, because English law and New York law are well developed and will help to ensure neutrality Especially where governmental funds or assistance is involved, Developers should be prepared to execute a statement of the type represented by this Article, which is applicable in Host country
23 22 21 20 19

If there is to be an Implementation Agreement, the Developer may seek assistance from the

Government in expediting its applications for Consents and/or assurances that the Government will grant all Consents for which the Developer has properly applied. If such protection is included in the Implementation Agreement, the Developer may wish to limit the definition of Consents in this Agreement to the Consents covered by the Implementation Agreement.

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