What I learned from a delinquent Solar PPA offtaker

What a mess.

A client of mine has a solar PPA with an offtaker that hasn’t paid the bill in quite awhile. Steps we have had to take to fix this:

  1. Terminate the PPA
  2. Negotiate a new net metering credit purchase agreement with another offtaker in the same load zone
  3. Get the site host (delinquent offtaker) to sign new documents allowing a lease of the roof, and access to the utility account so we can adjust the Interconnection agreement
  4. Hire a contractor to re-wire the system so that it would no longer be behind the meter, and now act as a stand-alone system that exports 100%
  5. Get the utility company to agree to install a new dedicated meter for the stand alone system
  6. Correction, hire an attorney to accomplish #5 because the utility was non-responsive
  7. Get the bank to approve financing to complete the electrical work because it’s not cheap
  8. It’s not over yet.

All of this after months and months of back and forth with the offtaker, promising to pay the bill, and never sending a check, or sending checks that bounce.

A few lessons learned…

1) Better due diligence – whoever developed the project dropped the ball on credit review of the offtaker. Some simple googling would have turned up a suite of credit risks that would have been non-starters.

2) Always sign a separate lease agreement that doesn’t terminate with a PPA. You need to protect your assets, and ability to access and operate them regardless of other factors.

3) Make sure the asset owner’s name is always on the Interconnection agreement – not just the host customer or the developer. This enables you to communicate directly with the utility and make it so you can simply amend the existing ISA and not apply for a new one

At the end of the day – and this proves itself time and time again – sometimes the best deals are the ones you don’t do. This project never should have been built because of the credit risks. Being handcuffed to a project you’re trying to salvage is a terrible situation.