Force Majeure: Relief That Stops Some Clocks and Not Others

A successful force majeure claim can still be expensive for the sponsor. If the EPC grants schedule relief, contractor delay LDs may stop accruing while project carrying costs continue. Whether the PPA clock, financing milestones or other obligations also move is a separate document-by-document question.

Force majeure is not one project-wide switch. The EPC, PPA, interconnection agreement and financing documents each contain their own definitions, notice rules and consequences. A commercial force-majeure clause also cannot, by itself, amend a statutory placed-in-service cutoff.

This is the second post in the three-part Risk Allocation section of Contracts & Legal. You will get the test an event has to pass, why a pure price increase is usually a different contractual problem, which clocks the relief actually reaches, what the notice and mitigation regime demands, and a worked model of what a granted claim can cost the sponsor.

ℹ️ Note: This describes how these mechanisms work in practice. It is not legal advice — force majeure is highly contract-specific and the outcome turns on the precise wording and governing law.

What Does Force Majeure Actually Relieve?

Whatever the contract says it relieves.

A public solar PPA filed with the SEC gives a useful primary-source example. Its force-majeure clause excuses delay or nonperformance to the extent substantially caused by a qualifying event, preserves obligations that are not actually prevented, and expressly says force majeure does not excuse a failure or inability to make payments when due.

That structure captures the point better than the shorthand “force majeure gives time, not money.” Many project contracts primarily grant schedule or performance relief, but parties can draft cost consequences, adjustment rights or termination rights as well. The financing analysis therefore starts with four questions:

• Which obligation is excused?
• For how long?
• Does the clause also adjust price, quantity or another economic term?
• What obligations expressly survive?

A clause in the EPC does not automatically change the PPA or the credit agreement. Each instrument must be read separately.

What Test Does an Event Have to Pass?

The defined test in the executed contract.

There is no single universal US project-finance force-majeure definition. The filed solar PPA above requires a cause or event beyond the reasonable control of, and without the fault or negligence of, the claiming party, then gives an illustrative list of events. It also contains express exclusions.

That drafting is useful because it shows the real diligence method:

1. Definition: is the event named or within the catch-all?
2. Causation: did it actually prevent or delay the obligation being claimed?
3. Control / fault: was it outside the claiming party's reasonable control and not caused by its fault?
4. Exclusions: has the contract specifically allocated the event elsewhere?
5. Procedure: were notice and mitigation requirements satisfied?

Do not import an “unforeseeability” requirement unless the contract or governing law actually contains one. Some clauses use foreseeability concepts; others do not.

The same filed PPA also demonstrates why supplier risk needs careful reading: acts or omissions of vendors or suppliers are excluded unless those acts or omissions are themselves excused by a qualifying force-majeure event.

Does Increased Cost Qualify?

Not merely because performance became less attractive.

Again, the contract controls. The SEC-filed solar PPA expressly excludes changes in market conditions affecting the cost of supplies, demand or product prices. That is a clean example of parties allocating ordinary market-price risk away from force majeure.

Other contracts can be drafted differently. The useful distinction is therefore not “cost can never be force majeure,” but whether the event merely increased price, actually prevented or delayed performance, or belongs under a separate change-in-law / price-adjustment mechanism.

A supplier charging more is fundamentally different from a supplier being legally prohibited from shipping or physically unable to perform because of a qualifying event. The project should test the actual causal chain and the actual clause rather than relabel a price claim as force majeure.

Which Clocks Does Force Majeure Actually Stop?

Only the clocks whose documents grant relief.

Clock	Lives in	Force-majeure effect to test	Financing consequence
Construction	EPC agreement	extension / excused performance if the clause applies	contractor LD protection may switch off while owner carry continues
Offtake	PPA	COD / delivery relief only to the extent the PPA grants it	mismatch with EPC relief can create uncovered delay exposure
Financing	Credit agreement	no automatic effect unless the financing documents provide one or lenders waive / amend	interest, fees, drawstop and maturity mechanics must be tested separately
Tax / statutory	Code and IRS guidance	commercial FM cannot amend a statutory cutoff	legal eligibility dates and continuity rules must be analysed under tax law, not the EPC

The point is asymmetry, not a market-wide rule that every contract behaves identically.

For the current wind-and-solar section 45Y / 48E termination regime, the statutory 31 December 2027 placed-in-service cutoff for later starters is not extended by an EPC force-majeure clause. Earlier-starting projects can still rely on the separate IRS continuity framework, including facts-and-circumstances concepts, but that is a tax analysis rather than contractual time relief.

On the financing side, do not write “FM does not extend debt service” as if it were a rule of law. Instead, read the drawstop, completion deadline, conversion date, maturity, reserve mechanics and waiver provisions in the actual credit agreement.

Why Does Asymmetry Between Documents Matter So Much?

Because relief is granted per contract, and two contracts rarely define the same event the same way. When the EPC clause is broader than the PPA clause, the contractor is excused and the sponsor is not.

Work the sequence. A supply disruption hits. The contractor serves notice under an EPC clause that enumerates "supplier insolvency" and obtains an extension. Delay LDs stop. The sponsor turns to the PPA to claim a matching extension of its guaranteed COD, and finds a narrower clause that does not enumerate supplier failure and whose catch-all is read restrictively. The sponsor now owes PPA delay damages on days when nobody owes it anything.

That is the same trap as post 3's date ladder, arriving through a different door. In post 3 the misalignment was between dates. Here it is between definitions — and definitions are harder to diligence because they look similar until someone reads both side by side.

Three checks flush it out, and they cost an afternoon:

• Are the enumerated lists the same across the EPC, the PPA and any material supply agreement?
• Do the catch-alls use the same formulation, and is one closed where another is open?
• Are the outside limits on cumulative extension the same length, and do they start from the same event?

The third is the one people miss. If the EPC grants unlimited extension for qualifying events and the PPA caps cumulative force majeure relief at 180 days, then on day 181 the contractor is still excused and the offtake clock is running again.

What Do the Notice and Mitigation Regimes Require?

Whatever the clause makes a condition to relief.

The same SEC-filed solar PPA gives a concrete example. It requires the affected party to notify the counterparty as soon as practicable, provide a more detailed written notice within a specified period, and use commercially reasonable efforts to cure the cause preventing performance.

That is why a force-majeure file should contain more than one letter:

• initial notice;
• event chronology;
• affected obligations;
• expected duration;
• mitigation steps;
• periodic updates;
• actual end date;
• schedule impact after mitigation.

Late notice can matter if the contract makes timely notice a condition to relief or limits relief for the pre-notice period. Do not assume the consequence; read the clause.

The same discipline applies to mitigation. The project needs evidence that the affected party was trying to overcome the event, not merely waiting for it to end.

What Happens When the Offtaker Claims Force Majeure?

Buyer-side force majeure is not hypothetical, but the economic effect is entirely contract-specific.

In the SEC-filed solar PPA used above, the buyer can invoke force majeure affecting its ability to take energy and can temporarily adjust expected-energy obligations subject to the agreement's mechanics. That is different from saying every buyer force-majeure event automatically eliminates payment for all undelivered energy.

For a financed project, test four items explicitly:

Payment treatment. Is the buyer excused from taking, from paying, or from both?

Term treatment. Does the contract term keep running, extend, or stay fixed?

Duration / termination. Does prolonged buyer force majeure create an outside date or termination right?

Deemed energy interaction. Is curtailed or unavailable delivery separately compensable under the PPA, or excluded because the same event is force majeure?

The lender's exposure is the cash-flow result of those four answers, not the label “buyer force majeure.”

Financing Obligations Need Their Own Analysis

A force-majeure clause in an EPC or PPA does not amend a credit agreement by implication.

During a prolonged interruption, revenue can fall while interest, fees, fixed operating costs and reserve requirements continue under the financing documents. Whether scheduled principal is due, whether a drawstop occurs, whether completion support is called, and whether a waiver is available are all credit-agreement questions.

A useful liquidity bridge is therefore:

1. lost / deferred project revenue;
2. any LDs or contractual compensation that stop because the event is excused;
3. continuing fixed costs and debt service;
4. available DSRA / liquidity reserves;
5. insurance recoveries, with waiting periods and exclusions;
6. sponsor support or waiver capacity.

That bridge tells you how long an excused event can be tolerated before it becomes a financing problem.

How Do You Model a Force Majeure Event in Excel?

Model it as a transfer, not as a pause. The instinct is to treat an excused period as neutral — nobody is in breach, so nothing happened. In cash terms a great deal happened, and almost all of it moved in one direction.

The inputs

Assumptions, labelled as such:

Force majeure duration               90 days
Delay LD daily rate                  $45,000
Daily carrying cost                  $65,000
PPA cumulative FM extension limit    180 days
FM already claimed this project      120 days
Days of PIS slack before the event   200 days

What the sponsor gives up

LD_Protection_Forgone = FM_Days × Delay_LD_Rate
                      = 90 × 45,000                       = $4,050,000

Those are damages the contractor would have owed and now does not. Nothing about the sponsor's position improved; a liability simply ceased to exist on the other side of the table.

What the sponsor still pays

Carrying_Cost_Borne   = FM_Days × Daily_Carrying_Cost
                      = 90 × 65,000                       = $5,850,000

Debt service, fixed costs and lost margin continue throughout, because force majeure relieves performance obligations and not payment obligations.

The net movement

Position_Without_FM   = Carrying_Cost − LD_Recovery
                      = 5,850,000 − 4,050,000             = $1,800,000

Position_With_FM      = Carrying_Cost − 0                 = $5,850,000

Transfer_To_Sponsor   = 4,050,000                          (225% worse)

A granted claim moved $4.05m from the contractor's side of the ledger to the sponsor's, and the project is no further forward.

The limit test

Cumulative_FM         = 120 + 90                           = 210 days
PPA_Extension_Limit   = 180 days
Unprotected_Days      = MAX(0, 210 − 180)                  = 30 days

PPA_Exposure          = 30 × PPA_Delay_Damages_Per_Day

Thirty days on which the contractor remains excused under the EPC and the sponsor is liable under the PPA. This is the cell to build once and keep — cumulative force majeure against the PPA's outside limit, with the excess flagged. It is invisible in any single-event analysis because it only appears when claims accumulate.

The clock that does not move

PIS_Slack_After       = 200 − 90                           = 110 days

No relief, no extension, no counterparty. Every excused day consumes tax deadline slack at exactly the same rate as an unexcused one.

ℹ️ Note: If the PPA uses a cumulative force-majeure cap, track the running total from the first claim rather than analysing each event in isolation. A series of individually modest claims can then exhaust the same outside limit.

To run the full version — cumulative FM tracked against the PPA limit, LD suspension applied to the real sculpted debt service, and the placed-in-service slack recalculated on each claim — prompt Dezzmond with your contract terms and claim history.

What Do Lenders Actually Check?

Lenders read force majeure for one thing: how much excused delay the structure can absorb before equity has to fund it.

• Do the EPC and PPA definitions match? Enumerated lists, catch-all wording, and governing law construction.
• What is the cumulative outside limit in the PPA, and how much is already used? The running total, not the current claim.
• Does the credit agreement extend anything? Usually not — confirm rather than assume.
• How much placed-in-service slack remains? Measured after the longstop, and reduced by every excused day.
• Is relief limited to the duration of the event? If so, resequencing time is uncovered.
• Were notices served on time? A procedurally defective claim is a claim the contractor may lose — which is good for the sponsor's LD position and bad for the schedule.
• Is there an equity commitment sized to an excused-delay scenario? This is the funding question underneath all the others.

Frequently Asked Questions

Does force majeure provide money or just time?

The contract decides. Many project agreements primarily provide schedule or performance relief, while economic compensation is handled elsewhere, but parties can draft adjustment or payment consequences into the same clause. Read the relief provision, not just the event definition.

Does a tariff or price increase count as force majeure?

Generally no. Force majeure addresses inability to perform, not increased cost of performing. A supplier that stops shipping entirely may qualify; a supplier that ships at a higher price usually does not.

Does force majeure extend the tax placed-in-service deadline?

No. Statutory and guidance deadlines do not contain commercial force majeure relief. Excused delay consumes tax deadline slack exactly as unexcused delay does, which makes it the constraint to watch during a long claim.

What happens when cumulative force majeure exceeds the PPA limit?

The offtake clock restarts while the EPC excuse may continue. The sponsor becomes liable for delay damages on days when the contractor owes nothing — the same exposure shape as the dead zone in post 3, reached by a different route.

Does force majeure suspend debt service?

Not automatically. An EPC or PPA force-majeure clause does not amend the credit agreement. Scheduled debt service, completion deadlines, reserves and waiver mechanics therefore need to be tested under the financing documents themselves.

Can a force majeure claim be lost on procedure?

Yes. Notice requirements are typically strict and short, and failure to comply can forfeit relief for the pre-notice period or the claim altogether. The duty to mitigate is continuing, and relief is usually limited to the duration of the event itself.

Closing: Excused Is Not the Same as Free

Force majeure is the clause everyone reaches for in a crisis and the one that does least for the party that usually invokes it last. It is designed to stop a party being in breach for something it could not control, and at that job it works. What it does not do — and was never built to do — is make anyone whole.

For a sponsor the arithmetic is uncomfortable in a way the drafting obscures. The contractor's excuse is immediate and complete. The offtake extension is partial and capped. The financing and the tax deadline do not move at all. A granted 90-day claim in the worked example above transferred $4.05m to the sponsor and advanced the project by nothing.

That is the seventh instance of the same pattern in this series. Each document does exactly what it says. The exposure lives in the space between them — between an EPC definition and a PPA definition, between a cumulative limit and a disruption that outlasts it, between three clocks that can be paused and one that cannot.

Next, the last of the risk allocation trio: caps, sub-caps and aggregate liability — what actually survives when several things go wrong at once.

Related reading: Change-in-law risk allocation · Guaranteed dates and longstops

Sources: SEC-filed Solar Energy Purchase Power Agreement — Article 14 Force Majeure · Public Law 119-21, sections 70512–70513 · Dezzmond analysis; worked-example assumptions are illustrative.