How to Balance Lender and Contractor Interests on Alternative Energy Construction Projects

Lenders who finance wind and solar farms often require the EPC contractor to consent to the developer’s assignment of the EPC Contract to the lender to secure the developer’s obligations under the loan documents. Such consents are typically included in a “Consent and Assignment” or “Consent and Agreement” that also includes other promises and representations by the contractor. Because lenders usually depend on the value of the project as collateral for the loan, if the project is not completed, the value of that collateral is severely limited. The Consent and Assignment ensures that the lender can step in for the developer to have the contractor complete the project if the developer defaults on its loan obligations. Contractors, on the other hand, want to ensure that they get paid for the labor, materials and equipment provided to the project. Careful drafting of a Consent and Assignment can protect both lenders and contractors.

 

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