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Title:  2.4 Notice to Proceed (Exhibit A: Technology Specific Provisions) - Liability Limit
Submitted By:  Andrew Lee, Project Developer, Acciona Wind Energy Canada Inc.
Date:  6/26/2009
Document Text:  For the case of on-shore wind, the draft FIT Contract provides for a pre-construction liability limit of $400,000 + $2000/MW. This is substantially less than the 2% of project costs that what was indicated by the OPA on slide 9 of the Session 5 FIT stakeholder session of April 14, 2009. As an example, using the capital cost assumptions as presented on slide 40 of the Session 4 FIT stakeholder session of April 7, 2009:
For a 10 MW project:
a) A 2% of project costs pre-construction liability limit would be $640,000 ($3200/kW x 10,000 kW x 2%).
b) Under the proposed draft FIT contract, the pre-construction liability limit would be $420,000 ($400,000+$2000/MWx10MW)
This corresponds to approximately 1.31% of project costs.

For a 100 MW project:
a) A pre-construction liability limit of 2% of project costs would be $5,800,000 ($2900/kW x 100,000 kWx2%).
b) Under the proposed draft FIT contract, the pre-construction liability limit would be $600,000 ($400,000+$2000/MWx100MW).
This corresponds to just 0.21% of project costs.

As shown, the proposed pre-construction liability limits are considerably less than what was indicated by the OPA during the FIT stakeholder sessions. The 2% of project cost pre-construction liability limit is reasonable and the OPA should set the limit according to the assumptions used in the OPA's pricing models. It is suggested to set the pre-construction liability limits at:
a) For on-shore wind projects less than 10 MW: $64/kW (2% of $3200/kW)
b) For on-shore wind projects greater than 10 MW: $58/kW (2% of $2900/kW)

Note, the example of on-shore wind is given but a similar methodology should be used for all other technology types as well. This would align with what the OPA had presented during the stakeholder sessions.

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