Lynch and Temeng Author PFI Article on Key Considerations When Negotiating Hedge Agreements
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Project Finance International has published the article “Ten Commandments for Energy Hedge Agreements,” written by Akin Gump partner Daniel Lynch and counsel Yaw Temeng. The article provides an overview of some of the key considerations one should weigh when negotiating a hedge agreement.
The agreements, Lynch and Temeng write, can go by many different names. Regardless of what they are called, though, they are intended “to create a predictable revenue stream for the project company from a creditworthy offtaker.”
The 10 factors that the authors say should be considered are:
- Term and termination.
- Permitted additional transactions.
- Pricing real-time versus day-ahead settlement.
- Basis risk.
- Security/collateral requirements.
- Construction milestones.
- Physical versus financial settlement.
- Availability requirements.
- Change of law risk.
- Ownership of future capacity.
To read the article in its entirety, please click here.
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