Force Majeure: Relief That Stops Some Clocks and Not Others

A successful force majeure claim is a cost to the sponsor. That sentence reads backwards until you follow the money: force majeure excuses performance, and the performance it excuses is the contractor's. The delay liquidated damages that were funding the sponsor's exposure stop accruing. The carrying cost does not stop. The tax deadline does not move.

Force majeure is relief denominated in time, and the project has clocks that time relief cannot reach. Post 3 set out four of them — construction, offtake, grid and tax. Force majeure stops the first, pauses the second up to a limit, and leaves the last one exactly where it was.

This is the seventh post in the series and the second of three on risk allocation. You will get the test an event has to pass, why increased cost almost never qualifies, which clocks the relief actually reaches, what the notice and mitigation regime demands, and a worked model of what a granted claim costs 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?

The obligation to perform on time. Not the obligation to pay, and not the cost of the disruption.

Haynes Boone is direct on the point: force majeure provides time extensions only — not financial compensation. And relief is not general. As they put it, "a deadline or performance obligation in a project contract will only be excused to the extent the contract includes a specific excuse for delay."

That second half matters more than it looks. Force majeure is not a doctrine floating above the contract that suspends everything equally. It is a list, and an obligation is excused only if that obligation is within the scope of the clause that contains the list. A clause in the EPC excuses EPC obligations. It has nothing to say about the credit agreement.

So the correct question is never "was this force majeure?" It is "which specific obligations, in which specific documents, were excused — and what was still running the whole time?"

What Test Does an Event Have to Pass?

Three elements, all of them assessed against the contract's own wording rather than a general standard.

Holland & Knight identifies the standard requirements for a qualifying event. It must be:

• "unforeseeable"
• "outside the reasonable control of the party seeking to have its obligations excused"
• "a result of circumstances other than that party's negligence or willful misconduct"

Foreseeability is measured at the time of contract execution, not contemporaneously — which is the element that quietly disposes of most claims. An event already visible when the contract was signed is not unforeseeable, however severe it later becomes. A trade proceeding under investigation, a known permitting backlog, a supplier already in public difficulty: all foreseeable at signature, all excluded, regardless of how bad the outcome was.

Haynes Boone makes the practical version of the same point about scope. Parties "should carefully review their existing force majeure definitions for specific events such as 'government action,' 'labor shortages,' 'disease outbreaks'" to establish whether a given disruption qualifies at all — and there is, in their framing, no blanket answer. Whether an event triggers relief depends entirely on each contract's language.

ℹ️ Note: Enumerated-list clauses and catch-all clauses behave very differently. A list of named events with "and any other event beyond the reasonable control of the affected party" is far broader than a closed list — and in some governing laws the catch-all is read narrowly, as limited to events of the same kind as those enumerated.

Does Increased Cost Qualify?

Almost never on its own. Force majeure asks whether performance became impossible or impracticable, not whether it became expensive. A contractor that can still build, at a higher price, has not been prevented from performing.

This is the cleanest line between this post and the previous one. A tariff that raises module prices by $0.11/W is a cost event, and cost events are the province of change in law clauses, price adjustment mechanisms and hardship provisions — not force majeure. Sponsors regularly receive force majeure notices for what are in substance price claims, and the distinction is worth holding firmly, because conceding it converts a capped cost-sharing negotiation into an uncapped schedule extension.

Where the two do meet is when a cost event causes a physical one. If a supplier stops shipping altogether rather than shipping dearer, the consequence is unavailability rather than expense, and that may well be within the clause. The test is whether the effect on performance is inability or unattractiveness.

Which Clocks Does Force Majeure Actually Stop?

This is the section to keep. Post 3 established that a project runs on four clocks in four documents. Force majeure does not treat them equally, and the gaps are where the damage happens.

Clock	Lives in	Does FM stop it?	Consequence
Construction	EPC agreement	Yes — contractor excused	Delay LDs stop accruing. The sponsor's funding mechanism switches off.
Offtake	PPA	Partly — COD extended, "usually with some outside limit"	Protection runs out at the limit while the disruption may not.
Financing	Credit agreement	Usually not	Development-stage deadlines typically do not extend. Interest and fees keep running.
Tax	Statute and IRS guidance	No	Placed-in-service deadlines do not move for a commercial event.

Haynes Boone confirms both of the middle rows. On the offtake: PPAs "typically extend commercial operation dates for force majeure, usually with some outside limit." On the financing: "this deadline does not typically get extended for force majeure or other excused delays" in development-stage financing agreements.

The tax row is the one that ends projects. Haynes Boone's contemporaneous example was wind projects that "must be operational before the end of 2020 to receive the full 2016 value of the production tax credits," with construction delays risking the credits entirely. The statutory deadline had no force majeure provision then and does not acquire one now. A pandemic, a hurricane and a supplier insolvency are all commercially excusable and none of them extends a placed-in-service date.

Read the table as a whole and the asymmetry is stark. The clock that stops completely is the one that was paying you. The clocks that keep running are the ones that cost you money.

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?

Strict compliance, and continued effort. Force majeure clauses are procedural instruments as much as substantive ones, and a valid claim can be lost on process.

Haynes Boone emphasises that parties must "strictly comply" with the notice requirements in the clause. Notice periods are typically short, measured from when the affected party became aware of the event, and the remedy for late notice is often loss of relief for the period before notice was given — or loss of the claim entirely.

Their drafting guidance is to serve early: make an initial notice "regarding potential impacts before they may be quantified, with updates as better information becomes available." A notice that waits for certainty is frequently a notice served too late.

Mitigation is a continuing obligation, not a one-off test. The CPUC precedent Holland & Knight describes requires parties to take "steps to overcome the effects of the force majeure using due diligence," with notification to counterparties required to maintain eligibility for relief. And the scope of relief is bounded by the event itself — extensions run "only in the duration of the force majeure," not for the knock-on schedule consequences that often exceed it.

That last point is worth pricing. A 60-day port closure rarely costs 60 days of schedule. It costs 60 days plus the resequencing, the lost crew, the slot in the manufacturing queue. If the clause relieves only the duration of the event, the tail is the sponsor's.

What Happens When the Offtaker Claims Force Majeure?

Force majeure is usually discussed as the contractor's shield, which is why the more dangerous version gets underweighted: the offtaker has one too, and its obligation is to pay.

A PPA force majeure clause is normally mutual. The seller can be excused from delivering; the buyer can be excused from taking and paying. The events that excuse a buyer are different in kind — a transmission outage on its side of the point of delivery, a failure at its own facility, a regulatory order affecting its ability to receive — but the effect on the project is the one that matters: a plant that is fully operational, fully available, and not being paid.

That is a materially worse position than construction-phase force majeure. During construction the project is not yet earning, so an excused delay defers revenue. During operations the project is earning nothing while every fixed cost continues, and unlike a curtailment claim under a deemed-generation provision, an excused buyer typically owes nothing for the energy it did not take.

Three things determine how exposed the project is:

Is buyer force majeure symmetrical in duration? Some PPAs cap the seller's cumulative relief tightly while leaving the buyer's open, or vice versa. Symmetry is worth checking explicitly rather than assuming.

Does buyer force majeure suspend the term or extend it? If the PPA term keeps running during an excused period, the project loses those months of contracted revenue permanently. If the term extends, it recovers them at the back end — twenty years out, discounted to very little, but recovered.

Does prolonged buyer force majeure give the seller a termination right? Without one, a project can sit indefinitely available and unpaid under a contract nobody has breached.

For a financed project this is a debt sizing question rather than a drafting curiosity. Lenders size against contracted revenue, and contracted revenue that a buyer can lawfully suspend is worth less than the contract's face suggests.

Force Majeure Does Not Excuse Debt Service

The clock that no force majeure clause reaches, and the reason an excused event can still be a default.

Every contract in the project can suspend its obligations. The credit agreement does not. Interest continues to accrue, scheduled principal continues to fall due, and the fact that nobody has breached anything is irrelevant to whether the payment is made.

The sequence during a prolonged operational force majeure is therefore predictable:

Revenue stops, costs continue. Fixed operating costs, insurance, land rent and administration are unaffected by an excused counterparty.

The coverage ratio collapses. A project sized at 1.30× with a lock-up at 1.15× has roughly 11.5% of cash flow between it and suspended distributions. An operational force majeure removing revenue entirely clears that in weeks.

Distributions stop. The lock-up triggers, which is the system working as intended — cash is trapped inside the security perimeter while the situation resolves.

The debt service reserve is drawn. Typically six months of principal and interest, which is the real measure of how long a project can survive an event with no revenue. That reserve is the buffer between an excused event and a payment default, and it is the reason the reserve exists.

Past six months, the options narrow to an equity injection, a waiver, or a restructuring.

Two consequences worth carrying into the drafting.

The DSRA sizing is a force majeure assumption in disguise. "Six months" is a judgement about how long a serious but recoverable interruption lasts. A project whose realistic worst-case force majeure exposure is longer than its reserve has a mismatch, and the fix is a larger reserve or business interruption cover with a matching indemnity period — not a better force majeure clause.

Business interruption insurance is the instrument that actually helps. It pays for lost revenue during a covered interruption, which is precisely what the force majeure clause does not do. Its indemnity period, its waiting period and its exclusions are therefore more consequential to the financing than the force majeure definition, and they are usually reviewed by a different adviser at a different time.

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: Track cumulative force majeure days as a running total from the first claim, not per event. The outside limit is nearly always cumulative, and a series of individually modest claims is the normal route to exceeding it.

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?

Time. Force majeure provides extensions of time to perform, not financial compensation. Cost consequences are dealt with, if at all, through change in law provisions, price adjustment mechanisms or hardship clauses.

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?

No. Every project contract can suspend its obligations; the credit agreement cannot. Revenue stops, fixed costs continue, the lock-up triggers and the debt service reserve is drawn — which is why the reserve's size is effectively an assumption about how long a force majeure lasts.

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.

Sources: Haynes Boone — COVID-19 Impact on Renewable Energy Asset Development · Holland & Knight — Force Majeure: Pandemic Issues That Could Impact Electricity Contracts