Who are they for? Oil & Gas production companies, Renewable Energy companies, Mining companies, Quarries
Decommissioning bonds are often required to cover potential decommissioning costs in the energy industries when an asset comes towards the end of its useable life. Restoration bonds may be needed to secure the cost of returning land to its original state after completion of mining or quarrying activities. Both of these bonds could replace the requirement for a Letter of Credit (LOC) that would usually be issued by a bank and in turn free up the clients working capital.
Grid Connection (Connection Charges) Bonds
Who are they for? Commercial and residential property developers
The developer of an energy asset may be required to provide a Grid Connection bond in favour of the National Grid which guarantees the returning of the infrastructure to the correct condition post-connection of the asset to the grid. These bonds can also relate to guaranteeing the cost of installing and maintaining the connection of the assets should the Developer default.
PPA (Power Purchase Agreements) Bonds
Who are they for? Investment companies focused on infrastructure, Infrastructure funds investing in renewables, Renewable energy asset managers, independent electricity producers, Utilities and energy companies that wish to build their own renewables asset.
PPA bonds guarantee the delivery of energy outlined in the PPA (as well as payment terms and other performance metrics within the PPA agreement) from the Principal (Developer/Seller) to the Employer (Offtaker). The Employer enters into an agreement with the Principal (Developer/Seller) that they will purchase an amount of energy, usually green, at a guaranteed price for a long term, usually 5 -30 years.
Performance Bonds
Performance bonds guarantee that the Bonded Principal will undertake and fulfil their contractual obligations agreed with the Beneficiary.
In the event of contractual default (usually via insolvency of the Principal), the Beneficiary will hold security in the form of the bond which will reimburse and pay out losses and damages up to the maximum bond amount.
Who are they for? Main Contractors, Sub-Contractors, Service Providers.
