Balance of plant agreements in wind farm projects—Overview

The following Energy practice note provides comprehensive and up to date legal information covering:

  • Balance of plant agreements in wind farm projects—Overview
  • Scope of this note
  • What is a BOP Agreement and why is it used?
  • Nature of construction works in wind farm projects
  • BOP Agreement “Wrap”
  • Contractual structure featuring a BOP Agreement
  • Key provisions in a BOP Agreement
  • Standard form BOP contracts
  • Disputes
  • Responsibility for plant malfunction or other defects in the works
  • More...

Balance of plant agreements in wind farm projects—Overview

Scope of this note

This note provides an overview of Balance of Plant (BOP) Agreements in the context of wind farm projects. It considers:

  1. what BOP Agreements are, and why they may be used as part of a disaggregated construction procurement structure

  2. the typical construction contractual arrangements within which BOP Agreements feature

  3. the key provisions in a BOP Agreement

  4. standard form documents that may assist in drafting a BOP Agreement

  5. areas where disputes may arise

This note is based on UK wind farm projects, although many of the issues and structures discussed will be applicable to international projects. It assumes the wind farm development will be project financed and includes relevant project financing considerations.

In this note, all references to:

  1. Developers—are to the developers of the wind farm project who are typically the project sponsors

  2. Project company—are to the company which is normally set up as a special purpose vehicle, and through which the wind farm is built, financed and operated. Its shareholders are the project sponsors

  3. Lenders—are to lenders providing project finance for the wind farm development

What is a BOP Agreement and why is it used?

A BOP Agreement governs the construction and/or supply of the electrical equipment and civil works elements of a power project which are necessary to ensure the operational integrity and reliability of all the power

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