Thursday, September 29, 2016

Mexico: Second Power Auction Results


Mexico has awarded long-term contracts to 23 companies under its second power auction. Officials results were issued on September 28, awarding contracts to buy electricity, capacity and clean energy certificates (CELs) from projects representing 3,944.57 MW, of which 2,891 MW will come from newly installed clean energy sources. Solar projects represent 1,823.97 MW, wind 1,128.5 MW, hydro 68 MW, geothermal 25 MW and combined-cycle technology 899 MW.

Thursday, September 22, 2016

#TBT: Islamic Project Finance: Structures and Challenges



This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article written by Richard Keenan, a partner in Chadbourne's project finance group. It was first published in the February 2010 issue of the Project Finance NewsWire.


Islamic finance is expected to make up 30% of the total project finance market in the Gulf Co-operation Council, or GCC, countries by 2012, compared to just over 12.5% in 2006, according to the latest estimates.

Thursday, September 15, 2016

#TBT: Secrets of the Biodiesel Market


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article written by Todd E. Alexander and Marissa Alcala,  partners in Chadbourne's project finance group. It was first published in the November 2006 issue of the Project Finance NewsWire.


The ethanol market showed signs of cooling this fall because of falling oil prices and fears about overcapacity, but interest in new biodiesel plants remains hot.

Thursday, September 8, 2016

#TBT: The Challenges Facing Renewable Energy Developers in Emerging Markets


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to a transcript of a panel moderated by Todd E. Alexander, a partner in Chadbourne's project finance group. It was first published in the November 2010 issue of the Project Finance NewsWire.

Chadbourne hosted a workshop for the multilateral lending and export credit agencies on renewable energy projects in emerging markets in September in its offices in Washington. The workshop covered a lot of ground. The following is an edited transcript of a panel discussion among three developers whose companies are working on renewable energy projects in Africa and Asia. The panelists are Aparna Rao, vice president of AES Africa Power Company, Brian Kubeck, senior vice president for development at Sithe Global Power, and Jim Scarrow, director of legal affairs for the Americas at SunEdison. The moderator is Todd Alexander with Chadbourne in New York.

Thursday, September 1, 2016

#TBT: Investing in Negawatts


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to a transcript that was first published in the Project Finance NewsWire in February 2013 written by James Berger, an associate in Chadbourne's project finance group.



Many financial institutions are trying to figure out ways to invest significant amounts of capital in energy efficiency as government incentives expire for renewable energy. Because it is often less expensive to avoid consuming a megawatt of energy by increasing efficiency than to build the generating capacity necessary to produce the same megawatt, energy efficiency investments promise attractive financial returns. 

Thursday, August 25, 2016

California Continues to Lead Fight against Climate Change

By Jim Berger, in Los Angeles

The California Senate passed SB32 yesterday, which codifies an executive order Gov. Brown issued on April 29, 2015 establishing the most ambitious greenhouse gas reduction target in North America.  The legislation is intended to make it more difficult for Gov. Brown’s successor to back off of his aggressive emission reduction goals.

Thursday, August 18, 2016

#TBT: Basics of Construction Contracts


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to a transcript that was first published in the Project Finance NewsWire in June 20015 and features Paul Weber, partner in Chadbourne's project finance group.



Chadbourne conducts regular training sessions for younger lawyers on issues that come up in project finance transactions. The following is the transcript from a training session in April on construction contracts. The speaker is Paul Weber, a project finance partner in the New York office. 

Monday, August 15, 2016

Massachusetts Law Authorizes Energy Storage Mandate


By Deanne Barrow, in Washington


Massachusetts could have an energy storage mandate in less than a year following a new law signed by Governor Charlie Baker last week. 

An Act Relative to Energy Diversity (H. 4568) instructs the Department of Energy Resources (DOER) to determine whether to set targets for electric companies to procure viable and cost-effective energy storage systems by the end of 2016. If the DOER decides that procurement targets are appropriate, then it must adopt the targets by July 1, 2017. Utilities will then have until January 1, 2020 to comply. 


Thursday, August 4, 2016

#TBT: Training Session: Material Adverse Change Clauses


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to a transcript that was first published in the Project Finance NewsWire in April 2002 and featuring Charles E. Hord, III, partner in Chadbourne's Corporate practice and Peter K. Ingerman, of counsel in Chadbourne's Corporate practice.



Training Session: Material Adverse Change Clauses

Chadbourne runs internal training sessions for lawyers in the project finance group and interested clients.  The following is an edited transcript of a session on material adverse change clauses in corporate transactions, principally mergers and acquisition transactions, that took place by videoconference in mid-March among the Chadbourne offices in New York, Washington and London.  The speakers are Peter Ingerman and Charles Hord in the New York office.  Copies of the handouts used for the presentation can be obtained by sending an e-mail to pingerman@chadbourne.com or chord@chadbourne.com.

Thursday, July 28, 2016

#TBT: Power Privatizations in Africa: Key Lessons


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was first published in the Project Finance NewsWire in November 2014 and written by Kevin Atkins and Ikenna Emehelu, partners in Chadbourne's Project Finance Group.



Power Privatizations in Africa: Key Lessons

Privatizations in sub-Saharan Africa offer key lessons for investors seeking to enter newly-deregulated power markets in Africa.

Monday, July 25, 2016

First Shipment of US LNG Passes Through Expanded Panama Canal

By Deanne Barrow, in Washington

Today marked the first voyage by an LNG tanker through the newly expanded Panama Canal. The expansion project began in 2007 and created a new high-capacity lane connecting the Atlantic Ocean to the Pacific Ocean. Construction finished in late June. The Panama Canal can now accommodate ships that are one and a half times larger.

The inaugural trip was made by a tanker transporting LNG from Cheniere’s Sabine Pass liquefaction plant in Louisiana. Five months ago, that facility made the first export of US shale gas to overseas markets.

Thursday, July 21, 2016

#TBT: How the Global Credit Crisis is Affecting Project Finance in the Gulf Arab States


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was first published in the Project Finance NewsWire in January 2009 and written by Richard Keenan, a partner in Chadbourne's Project Finance Group.



How the Global Credit Crisis is Affecting Project Finance in the Gulf Arab States


How different the project finance landscape looks now in the six Arab states that make up the Gulf Cooperation Council — Kuwait, Qatar, Bahrain, Oman, the United Arab Emirates and Saudi Arabia.

Thursday, July 14, 2016

#TBT: Negotiating With Chinese Lenders


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was first published in the Project Finance Newswire in November 2011 and written by Magnus Rodrigues, a partner in Chadbourne's Project Finance Group.




Negotiating With Chinese Lenders

Chinese lenders are emerging as a major source of funding in international project finance transactions. 

Developers in various sectors in Asia, Africa, Australasia, the Middle East, Europe and the Americas now routinely consider the option of using Chinese equipment with financing from Chinese lenders. 

Thursday, July 7, 2016

#TBT: Non-Appropriation Risk in Government Contracts


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was first published in the Project Finance Newswire in February 2013 and written by Amanda Rosenberg, an Associate in Chadbourne's Project Finance Group.




Non-Appropriation Risk in Government Contracts


A company with a contract to sell electricity, lease equipment or provide energy savings to a government entity should think carefully about the financeability of the contract.

Many jurisdictions place restrictions on contracts with government entities that straddle two or more fiscal years. The government must reserve the right in the contract not to make payments if the money for payments is not appropriated by the state legislature, county council or other legislative body. The reservation of rights is called a "non-appropriation" clause.

Such a clause can affect financeability. However, by taking a few simple steps, a developer can help protect his interests and ensure a successful financing.

Tuesday, July 5, 2016

Mexico’s Grandfathered Power Projects: An Opportunity for Investors

By Sean McCoy-Cador, in Mexico City

During the summer of 2014, just before Mexican energy reform was enacted, developers rushed to file power generation permits for their projects so that they could keep certain benefits of the then-existing legal regime. Today, such projects, which are known as “grandfathered” or legacy” projects, are very attractive to investors.

The Electricity Industry Law was enacted on August 11, 2014. It created two parallel legal regimes: (i) a so-called “legacy” or “grandfathered” regime granting vested rights to projects holding a power permit or an application filed with the Mexican Energy Regulatory Commission (the “CRE”) before the enactment of the Electricity Industry Law, and (ii) an “electricity market” regime under which projects are subject to burdensome regulations affecting congestion, financial transmission rights, and transmission and distribution fees.

Thursday, June 30, 2016

#TBT: Doomed to Invest in Russian Oil?



This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was first published in the Project Finance Newswire in April 2005.




Doomed to Invest in Russian Oil?


At a major oil and gas industry conference recently, Lukoil president Vagit Alekperov was asked about the prospects for foreign investment in Russia’s petroleum sector. This question followed only five days after a public statement by Russian Natural Resources Minister Yuri Trutnev that auctions to develop certain major Russian oil, gas and mineral fields would only be open “to those companies in which not less than 51% of the share capital belongs to Russian participants.”

Thursday, June 23, 2016

#TBT: When Banks Foreclose



This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was first published in the Project Finance Newswire in June 2003.




When Banks Foreclose


As more borrowers slip from full performance to covenant default, and then from covenant default to payment default, lenders are reviewing security packages and planning whether and how to exercise their remedies. Some borrowers will contest a bank’s foreclosure on a project; others will willingly hand over the keys. However, in all cases the lender needs to ensure it complies with applicable law and contracts so as to avoid becoming liable to the borrower, subordinated lenders and others as a result of its actions.

Previous articles in the NewsWire have addressed the bankruptcy, tax and other implications of purchasing a distressed project. Many of the same issues apply as well when a lender forecloses on the equity in its borrower. However, the focus of this article is the legal requirements under the Uniform Commercial Code, or “UCC,” for a lender to foreclose successfully on a borrower. The article is based on a senior secured lender’s recent foreclosure on a portfolio of power generation facilities located in the United States.

Thursday, June 9, 2016

#TBT: Tapping Into Capacity on Merchant Transmission Lines and Interties



This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in the Project Finance Newswire in November 2012 and written by Robert Shapiroa partner in Chadbourne's Project Finance Group.




Tapping Into Capacity on Merchant Transmission Lines and Interties


Decisions are expected soon from the Federal Energy Regulatory Commission on access and pricing for capacity on merchant transmission lines and on excess capacity on dedicated gen-tie lines that connect independent power plants to the grid. The commission is sifting through reams of comments.

Thursday, June 2, 2016

#TBT: Project Sales: Feed-In Tariff Insurance



This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in the Project Finance Newswire in November 2012 and written by Kenneth Hansena partner in Chadbourne's Project Finance Group.




Feed-In Tariff Insurance


The Overseas Private Investment Corporation is offering to insure projects against loss of income as a result of a government reducing or abrogating a feed-in tariff.

OPIC is a US government agency that provides financing and political risk insurance to promote US investment in emerging markets.

Thursday, May 26, 2016

#TBT: Project Sales: Traps for the Unwary


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in the Project Finance Newswire in February 2003 and written by Allen Millera partner in Chadbourne's Corporate Group.




Project Sales: Traps for the Unwary

Merchant power companies seeking to sell or refinance projects to increase liquidity face wary purchasers or lenders who are giving renewed scrutiny to a number of legal issues that extend the due diligence inquiry well beyond examination of the project and the contracts to which the project company is a party. In many respects, the law may not be what one thinks it is. What follows is a discussion of a few traps for the unwary.

Thursday, May 19, 2016

#TBT: Tax Issues and Opportunities in Restructuring Contracts


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in Project Finance Internation in April 1997 and written by Keith Martina partner in Chadbourne's Project Finance Group.





Tax Issues and Opportunities in Restructuring Contracts


A cartoon recently in the newspaper showed a group of football players in a huddle. One asks, "Have we considered the tax consequences if we punt?" Thankfully, not all actions have tax consequences, but some do and it can be very costly not to take them into account.

How to Satisfy the New Begun Construction Guidance in IRS Notice 2016-31

By Michael Masri in New York and Scott Cockerham in Washington

New IRS guidance for developers of wind farms and other renewable energy projects that qualify for production tax credits modifies the safe harbor period in which a project can be placed in service without the developer having to prove that the work was continuous.

The new rule provides that a project will be deemed to meet the continuous work requirement if it is placed in service by the later of (1) four calendar years after the calendar year in which construction began, or (2) December 31, 2016.

The guidance is in Notice 2016-31. It was originally issued on May 5, 2016, and included only the four-year safe harbor rule. The IRS reissued the guidance on May 18, 2106 to add the alternative December 31, 2016 deadline. The updated guidance also corrects a math error in an example in the original guidance, and states that it is effective for projects placed in service after January 2, 2013.

Tuesday, May 17, 2016

Surprise Move by the DC Circuit Court of Appeals in the Clean Power Plan Litigation

By Sue Cowell, in Washington

The DC Circuit Court surprised everyone Monday by rescheduling Clean Power Plan oral arguments to September 27, 2016 before the court's full panel of judges. Although this delays the date when the case will be heard by the court, it removes the possibility of an appeal from the prior three-judge panel to the full panel of DC Circuit Court judges as a possible interim step before likely being heard by the US Supreme Court.

Thursday, May 5, 2016

#TBT: Asset Sales in Bankruptcy


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in the February 2010 Project Finance Newswire and that is a transcript of a discussion with Andrew Rosenblatt, a bankruptcy partner at Chadbourne.



Thursday, February 25, 2016

US Lawmaker to Introduce Bill to Broaden CFIUS Mandate Beyond Security Concerns


by Amanda Rosenberg, in Los Angeles

A Democrat plans to introduce legislation in the House of Representatives today that would expand the scope of CFIUS reviews. News reports indicate that the legislation will allow CFIUS -- the Committee on Foreign Investment in the United States -- to review deals to determine whether there is a "net benefit" to the United States.  It also would permit CFIUS to consider a deal's effect on US employment, product innovation, public health and safety and whether a foreign company purchasing a US company abides by US rules concerning disclosure and transparency.

If passed, the legislation will have a significant impact on acquisitions of US companies by foreigners. Currently, CFIUS reviews acquisitions of US businesses by foreign acquirers for national security issues, meaning that only certain types of businesses and acquirers raise concerns. If the committee's mandate is expanded by the proposed bill , then potentially all M&A deals with foreign acquirers will be subject to the CFIUS regime. This would have the effect of slowing down and increasing the costs of completing deals. The CFIUS process can be costly and time-intensive. Additionally, parties will have to allocate the risk that CFIUS could block or unwind a deal. This likely would affect acquisition prices.

Monday, February 15, 2016

Clean Power Plan Speculation Following the Death of US Supreme Court Justice Scalia


by Sue Cowell, in Washington
US Supreme Court Justice Scalia's unexpected death changes speculation about the fate of the Clean Power Plan.  This is because the US Supreme Court's decision to stay implementation of the Clean Power Plan was decided by a vote of 5-4.  Justice Scalia voted to grant the stay.


Although the US Supreme Court's split of 5-4 to issue the stay shouldn’t be read to equate to votes to ultimately uphold the Clean Power Plan, it does provide guidance.  As a result, any Obama administration nominee may have to pass a Clean Power Plan litmus test given the administration's clear support of the Clean Power Plan and pledge to limit global warming under the 21st Conference of the Parties (or COP21) agreement.  COP21 was the 21st meeting of the parties to the 1992 United Nations Framework Convention on Climate Change.  The agreement reached at the COP21 aims to keep the increase in global average temperature to a maximum of 2° Celsius, but to try to limit the increase to 1.5° Celsius or lower.  The Clean Power Plan figures prominently in the US' pledge under this agreement. 

Tuesday, February 9, 2016

Supreme Court Stops Clean Power Plan in Its Tracks

by Sue Cowell, in Washington

The US Supreme Court stayed implementation of the Clean Power until the DC Circuit Court hears the pending litigation.  States and others requesting a stay argued that they would suffer irreparable harm during the pendency of the litigation. 

The US Supreme Court's stay remains in place until it issues a decision should it agree to hear an appeal of the DC Circuit Court's decision.  If the US Supreme Court hears an appeal, it's possible that its decision would not be issued before President Obama leaves office.  The US Supreme Court did not offer any explanation for the stay, but its decision was not unanimous.  Justices Ginsburg, Breyer, Sotomayor, and Kagan would not have granted the stay.

Thursday, February 4, 2016

Proposed Syngenta-ChemChina Deal Raises CFIUS Issues

by Amanda Rosenberg

Chinese state-owned ChemChina's proposed acquisition of the Swiss seed and pesticide company Syngenta likely will attract the attention of the Committee on Foreign Investment in the United States (CFIUS). CFIUS reviews transactions where a foreign person gains control over a US business. It focuses on national security issues.

There are at least two national security issues at play in the Syngenta-ChemChina deal.

First, Syngenta owns manufacturing facilities outside of Baton Rouge, Louisiana and in Houston, Texas that are registered with the Chemical Facility Anti-Terrorism Standards program under the US Department of Homeland Security, which regulates high-risk chemical facilities. These facilities likely will be classified as "critical infrastructure" for CFIUS purposes, meaning that the deal will be subject to a higher level of scrutiny. Syngenta also has a research and development facility in North Carolina. There may be other US facilities.

#TBT: Tactics When Caught in an Expropriation


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in the February 2013 Project Finance Newswire and written by Kenneth W. Hansen, a partner of Chadbourne's Project Finance group.



Thursday, January 28, 2016

The Clean Power Plan Remains on Track as the Legal Battle Rages

by Sue Cowell, in Washington



The latest attempt to stop the implementation of the Clean Power Plan has moved to the US Supreme Court. After the DC Circuit Court denial of immediate relief,  twenty-nine states and state agencies, the US Chamber of Commerce along with other business associations, coal industry stakeholders and a number of utilities filed petitions with the US Supreme Court now urging them to stay the Clean Power Plan. 


They argue that the Clean Power Plan will be held unlawful, and that they will suffer irreparable harm if an immediate stay is not granted. The states and state agencies are concerned about spending a lot of time and resources developing implementation plans to satisfy obligations under the Clean Power Plan before the court can rule on the merits of the case.  Even though implementation plans or requests for extensions to submit the plans are not due before September 6, 2016, as a practical matter, states must start working well before that date. Since the states and state agencies believe that the Clean Power Plan will be deemed unlawful, they are worried that the time and money spent on any planning will be a waste.  US Supreme Court Chief Justice Roberts asked the EPA to respond to the petition by the states and state agencies by 3:00 p.m. next Thursday.

Thursday, January 14, 2016

#TBT: Tax Issues in Project Sales


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in June 2004 and written by Keith Martin,
co-head of Chadbourne's Project Finance group.



Monday, January 11, 2016

Shaping the Clean Power Plan's Clean Energy Incentive Program


by Sue Cowell, in Washington

Although EPA expects the U.S. Court of Appeals for the District of Columbia to rule in the coming weeks on motions to stay implementation of the Clean Power Plan, planning by states and industry continues.  One aspect of the Clean Power Plan that has drawn considerable interest from the wind and solar industries is the Clean Energy Incentive Program or CEIP.

EPA developed the CEIP to encourage early investment in eligible solar or onshore wind projects and demand-side energy efficiency measures.  Credits or allowances earned by eligible projects under the CEIP are contemplated to be sold to affected entities to use to satisfy their own Clean Power Plan compliance obligations.  States are not required to participate in the CEIP; however, a state that wishes to participate must make a non-binding statement of such intent as part of that state's implementation plan or initial submittal that is due by September 6, 2016.  States that participate in the CEIP may award early action credits or allowances to eligible projects and, as an extra incentive, the EPA will provide matching allowances or credits up to a total of 300 million short tons of CO2 emissions.    

Thursday, January 7, 2016

#TBT: Financing Pollution Control


This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in the October 2005 issue of the Project Finance NewsWire featuring Keith Martin, a partner in Chadbourne's Project Finance group.




Financing Pollution Control


Any power company planning to install new pollution control equipment should consider whether it is possible to get the US government to pay part of the cost.