Delay LDs: Fox Run Burns $89,500 per Day and Recovers Only $30,000
Fox Run Solar is 24 days late under the PPA.
Part 1 showed two immediately visible costs:
PPA delay damages $25,000/day
Construction interest ~$34,500/day
Now add two more illustrative sponsor costs:
Owner / IE / insurance / site $10,000/day
Lost operating contribution $20,000/day
Fox Run's total teaching-case delay burn becomes:
$25,000
+ 34,500
+ 10,000
+ 20,000
=
$89,500/day
Assume the EPC says:
Delay LD rate $30,000/day
Delay LD cap $1.5m
The headline clause transfers:
$30,000 / $89,500
≈ 33.5%
of the sponsor's daily economic exposure before anyone asks whether the day is even LD-bearing.
That is why a delay-LD review should start with the sponsor's loss, not the contractor's daily rate.
The headline 24-day recovery is $720,000
If every one of Fox Run's 24 late days is contractor-responsible and no time extension applies:
24 days × $30,000/day
= $720,000
Fox Run's total sponsor loss over the same period is:
24 × $89,500
= $2.148m
Residual exposure:
Sponsor delay loss $2.148m
Less EPC delay LD recovery (0.720m)
-------
Residual sponsor exposure $1.428m
That number is not a coincidence.
Part 1's $1.428 million visible contract gap was made up only of PPA delay damages and construction-debt carry.
Once the owner/site cost and lost margin are added, a $720,000 EPC recovery brings the residual back to roughly the same amount.
The EPC clause did not make the project whole.
It shifted one-third of the broader delay economics.
First ask whether the EPC clock is still running
Part 1 compared two EPC structures.
Under Contract A, Substantial Completion requires commercial delivery.
Under Contract B, the EPC contractor can reach Substantial Completion before final grid-side commercial operation.
The same physical delay therefore produces different LD exposure.
Contract A
If the contractor has not achieved Substantial Completion:
EPC delay-LD clock potentially running
PPA delay clock running
Sponsor exposure accruing
subject to causation and time relief.
Contract B
If the contractor achieved Substantial Completion on June 28:
EPC delay-LD clock stopped
PPA delay clock running from July 2
Sponsor exposure accruing
The $30,000/day rate is irrelevant after the contractual clock stops.
So the first formula is not:
Actual COD - Guaranteed COD
It is:
Days the relevant EPC milestone is late
after contractual time relief
Causation can reduce the 24 days to 16 before the rate is applied
Keep Contract A.
Assume Fox Run is 24 calendar days late.
Now assume the contractor establishes that 8 days were caused by a qualifying transmission-owner event and properly earns an extension of time.
The contractual clock becomes:
Calendar lateness 24 days
Approved time extension (8 days)
--------
LD-bearing days 16 days
EPC recovery:
16 × $30,000
= $480,000
The sponsor still suffered the full 24 days of project delay.
Gross sponsor delay loss remains:
$2.148m
Residual sponsor exposure becomes:
$2.148m - $0.480m
= $1.668m
The contractor's relief did not make the project cheaper to finance.
It changed who bears the cost.
Notice can decide whether an otherwise real delay event earns relief
Recent filed EPCs make notice and change-order procedures part of the contractor's entitlement to schedule relief.
That means the legal delay model needs more than a cause column.
For every event, Fox Run should track:
Event
Date known
Critical-path effect
Contractual notice deadline
Notice delivered?
Mitigation performed?
Change order submitted?
Time relief approved?
Price relief approved?
Suppose the contractor had a genuine 8-day grid event but failed a contractual condition precedent and receives only 4 days of approved relief.
Then:
24 - 4
= 20 LD-bearing days
EPC LD recovery:
20 × $30,000
= $600,000
The value of the notice dispute is:
4 days × $30,000
= $120,000
A legal notice issue just became a six-figure model input.
Concurrent delay should be a sensitivity, not a hidden legal conclusion
Assume 6 days contain both:
- contractor-caused commissioning delay; and
- owner / transmission-provider delay.
The contract and governing law decide whether those days remain LD-bearing.
Finance should not make that legal determination in the spreadsheet.
It should show both cases.
Case 1 — overlap remains contractor-liable
LD-bearing days 20
Recovery
= 20 × $30,000
= $600,000
Case 2 — overlap is excused
LD-bearing days 14
Recovery
= 14 × $30,000
= $420,000
Value of the disputed concurrency issue:
$180,000
Now counsel knows exactly what the drafting point is worth to the project.
The sponsor should calculate its daily burn before negotiating the LD rate
Fox Run's teaching-case daily burn is:
| Delay cost | $/day |
|---|---|
| PPA delay damages | $25,000 |
| Construction interest | ~$34,500 |
| Owner / IE / insurance / site | $10,000 |
| Lost operating contribution | $20,000 |
| Total | ~$89,500 |
Compare three proposed EPC rates.
| EPC LD rate | Daily coverage of sponsor burn | Daily residual |
|---|---|---|
| $20k/day | 22% | ~$69.5k |
| $30k/day | 34% | ~$59.5k |
| $50k/day | 56% | ~$39.5k |
The right negotiated rate is not automatically $89,500/day.
Some sponsor losses may be too indirect, volatile or difficult to transfer.
The contractor will price the risk.
But the owner should know which part of the burn remains on equity.
Matching the PPA LD rate is not the same thing as matching the project loss
Fox Run's PPA delay damages are:
$25,000/day
If the EPC also paid:
$25,000/day
the PPA pass-through looks perfect.
It is not.
Sponsor daily cost would still include:
Construction interest ~$34,500
Owner / IE / insurance / site 10,000
Lost operating contribution 20,000
-------
Other sponsor cost ~$64,500/day
So:
PPA LD matched
≠
sponsor economically hedged
The PPA/EPC comparison is necessary.
It is not sufficient.
A $1.5 million cap covers 50 LD-bearing days
Fox Run's EPC LD cap is:
$1.5m
At:
$30,000/day
the cap covers:
$1.5m / $30,000
= 50 days
Put that date on the schedule.
If the Guaranteed Substantial Completion Date is July 1:
LD cap exhausts after 50 LD-bearing days
≈ late August
Now compare that with:
- PPA outside date;
- lender construction maturity;
- EPC termination trigger;
- expected replacement-contractor mobilization; and
- long-stop interconnection dates.
A percentage cap says little.
A 50-day protection window says a lot.
The worst delay can begin after the LD cap is gone
Assume Fox Run suffers 90 LD-bearing days.
Gross EPC LDs before cap:
90 × $30,000
= $2.7m
Contractual recovery:
MIN($2.7m, $1.5m cap)
= $1.5m
Sponsor delay loss:
90 × $89,500
= $8.055m
Residual before other recoveries:
$8.055m - $1.5m
= $6.555m
Days 51–90 are not necessarily the days when the project becomes safer.
They can be the days when:
- the PPA outside date is approaching;
- construction maturity is approaching;
- replacement-contractor planning begins;
- hedges move out of alignment; and
- sponsor support becomes most stressed.
A hard LD cap can leave the project with the largest exposure after the contractual compensation stops.
Sole-remedy language answers what happens after the cap
Many EPC contracts make delay LDs the owner's sole or exclusive remedy for the defined category of delay, subject to negotiated exceptions.
That means this assumption can be wrong:
LD cap exhausted
→ owner sues for all remaining ordinary delay losses
Fox Run needs a remedy map.
For example:
Late Substantial Completion
→ Delay LDs
→ sole remedy for ordinary delay damages?
Contractor default after long stop
→ termination right?
Termination
→ completion cost / replacement contractor claims?
Separate indemnity breach
→ indemnity rights?
Fraud / wilful misconduct / gross negligence
→ contractual carve-out?
"Sole remedy" attaches to a defined failure.
It does not necessarily erase every remedy in the agreement.
But it can eliminate the exact additional delay-damage claim the financial model is assuming.
Termination changes the loss category
While Fox Run remains under the EPC, the question is:
How much LD compensation accrues for delay?
After a valid termination for contractor default, the question changes.
Now the owner may need to fund:
- replacement-contractor premium;
- demobilization / remobilization;
- completion engineering;
- procurement rework;
- warranty gaps;
- extended owner's costs;
- additional delay; and
- increased financing cost.
Those losses can dwarf the remaining LD cap.
So Part 3 of this series must be read with this one.
The long-stop and termination provisions decide when Fox Run is allowed to stop treating the problem as ordinary delay and start treating it as a completion failure.
Shared caps can make the performance guarantee weaker after a delay
Assume Fox Run's EPC has:
Delay LD sub-cap $1.5m
Performance LD sub-cap $2.0m
Aggregate LD cap $2.5m
Fox Run uses the full $1.5 million delay cap before COD.
Maximum remaining aggregate LD capacity:
$2.5m - $1.5m
= $1.0m
Even though the performance LD sub-cap says $2 million, only $1 million of aggregate headroom remains.
The project can therefore arrive at COD with:
performance guarantee headline $2.0m
actual remaining aggregate headroom $1.0m
The financial model should calculate remaining cap headroom, not just read each sub-cap separately.
Security is not the same thing as LD entitlement
Assume Fox Run has:
EPC delay-LD entitlement $1.5m max
Letter of credit $1.0m
Retainage $0.4m
Parent guarantee balance
A strong legal entitlement does not automatically mean cash is collectible instantly.
The LC may be the most liquid layer, depending on draw mechanics.
Retainage only exists while money remains unpaid.
The parent guarantee is only as strong as the parent.
So the recovery waterfall is:
Contractual entitlement
↓
Available set-off / retainage
↓
LC / bond draw
↓
Parent / contractor credit
↓
Unsecured collection risk
A $1.5 million LD cap supported by $1.0 million of hard security is not the same economic protection as $1.5 million of cash collateral.
Security can step down at the wrong moment
Return to Part 1's Contract B.
Fox Run reaches EPC Substantial Completion on June 28.
Suppose the performance security steps down on Substantial Completion.
PPA COD does not occur until July 25.
The project has created this sequence:
28-Jun EPC security reduces
1-Jul PPA delay starts
25-Jul PPA COD finally achieved
The sponsor's counterparty protection has weakened immediately before the contractual interface exposure opens.
That is not necessarily wrong.
The EPC contractor may genuinely have finished its contractual work.
But the lender should see the mismatch.
Security step-down dates belong on the same milestone matrix as the remedy clocks.
The LD package should be recalculated after every change order
Assume Fox Run signs a change order that:
adds $15m to EPC price
extends Guaranteed SC by 45 days
does not move PPA Guaranteed COD
increases LD cap because cap is % of Contract Price
The nominal LD cap improves.
The PPA/EPC date gap worsens.
A change order can therefore:
increase contractor liability dollars
and
increase sponsor interface risk
at the same time.
Do not approve a major schedule change by looking only at:
- incremental EPC price; or
- revised contractor completion date.
Re-run:
PPA date
EPC guaranteed date
daily sponsor burn
LD rate
LD-bearing days
LD cap
security
long-stop / termination dates
as one package.
Fox Run's delay page
The construction model should have two bridges.
Contractual entitlement
Calendar delay 24 days
Approved relief [input]
Concurrent-delay treatment [scenario]
LD-bearing days [calc]
LD rate $30k/day
Gross LD [calc]
LD cap $1.5m
Contractual EPC recovery [calc]
Sponsor economics
PPA delay damages $25k/day
Construction carry ~$34.5k/day
Owner / IE / insurance / site $10k/day
Lost contribution $20k/day
----------
Gross sponsor burn ~$89.5k/day
Then:
Gross sponsor delay cost
- collectible EPC LDs
- insurance / other recovery
- remaining contingency
=
incremental sponsor completion support
That last line is the lender's problem.
The IC should see four numbers, not "10% LD cap"
For Fox Run:
Sponsor burn ~$89.5k/day
EPC headline LD rate $30k/day
LD cap $1.5m
Covered LD-bearing days 50
Then show:
24-day contractor-risk case
Gross sponsor cost $2.148m
EPC recovery (0.720m)
Residual $1.428m
24-day case with 8 days time relief
Gross sponsor cost $2.148m
EPC recovery (0.480m)
Residual $1.668m
90-day contractor-risk case
Gross sponsor cost $8.055m
EPC recovery capped at (1.500m)
Residual $6.555m
That tells the financing story.
"Delay LD cap = X% of EPC price" does not.
What the finance and legal teams should reconcile
For Fox Run:
- Which milestone actually triggers delay LDs?
- What date is guaranteed?
- Which events earn time relief?
- Is notice a condition precedent?
- How is concurrent delay treated?
- Does owner or grid delay earn time but not money?
- What is sponsor cash burn per day?
- Does the EPC LD rate match only PPA damages or broader exposure?
- How many days does the LD cap buy?
- Is the cap shared with performance LDs?
- What happens after the cap is exhausted?
- What breach does "sole remedy" actually cover?
- When can the owner terminate?
- What completion-cost remedies survive termination?
- What security supports the LD claim?
- Does security step down before PPA COD?
- How much sponsor completion support remains after all recoveries?
Fox Run's $30,000/day clause sounds meaningful until it is placed next to an $89,500/day sponsor burn.
The clause still has value.
It simply does not transfer the whole project-finance problem.
Primary sources: SEC — Axial Basin Solar EPC / Delay and Sole-Remedy Provisions · SEC — EPC Excusable Event / Notice Mechanics · SEC — EPC Agreement with Escalating Delay LDs · SEC — Solar EPC Agreement with Delay LD Provisions