AD Penalty Clause in Nepal's PPA — Research Compilation

Summary

Research compilation on the Available Declaration (AD) penalty mechanism in Nepal's standard hydropower PPA. Based on direct PPA text analysis by Parajuli (2023) and ERC regulatory commentary.

Key data extracted

• Article 10.2 formula: Penalty = [0.80 × min(Contract Energy, AD) - (Actual + Scheduled Outage + Forced Outage + Force Majeure)] × Purchase Rate
• No curtailment exemption: Off-taker curtailment is not listed as excusable cause. NEA can order reduced output and simultaneously penalise for the resulting shortfall.
• Article 10.1(Ka) reserve margin: NEA can withhold up to 10% of peak-period Contract Energy as system reserve with zero compensation — and then still penalise for shortfall below 80%.
• No "deemed generation" provision: Unlike IFC model PPAs, Nepal's standard PPA does not treat off-taker curtailment as compensable deemed generation.

Limitations

• Research compilation, not the contract corpus itself. The page summarizes PPA-clause analysis and regulatory commentary; it is not a complete archive of signed PPAs.
• Clause-level focus. The source isolates Article 10.1/10.2 AD-penalty mechanics and does not quantify how often NEA actually applies penalties in practice.
• Curtailment interaction unresolved. The no-deemed-generation finding identifies a contractual exposure, but the source does not provide case-by-case adjudication history.
• Legal interpretation boundary. The analysis describes contract structure and regulatory implications; it is not a formal legal opinion.