Item 1.01. Entry into a Material Definitive Agreement.
On October 21, 2021, Ameresco, Inc. (“Ameresco”) entered into a Turnkey Engineering, Procurement, Construction and Maintenance Agreement (the “EPCM Agreement”) with Southern California Edison Company (“SCE”) and also entered into three purchase orders under the EPCM Agreement providing for Ameresco to design and build battery energy storage system (“BESS”) facilities at three SCE locations with a capacity of 112.5 MW, to be located in Rancho Cucamonga, CA, 200 MW, to be located in Long Beach, CA and 225 MW, to be located in Porterville, CA, respectively, or 537.5 MW in the aggregate. The engineering, procurement and construction price is approximately $892 million, in the aggregate, subject to customary potential adjustments for changes in the work (the "Total EPC Price.").
Ameresco is obligated under the EPCM Agreement to achieve substantial completion of all three BESS facilities no later than August 1, 2022 (the “Guaranteed Completion Date”), subject to extension for customary force majeure events and SCE-caused delays. If Ameresco fails to achieve substantial completion of any of the facilities by such date, as extended, Ameresco must pay SCE liquidated damages in a daily amount ranging from 0.015% to 0.4% of the corresponding portion of the Total EPC Price for such facility per day, and accumulating in the aggregate to no more than 10% of such portion of the Total EPC Price, over the sixty (60) day period after the Guaranteed Completion Date. Such liquidated damages are SCE’s sole remedy for delay due to Ameresco’s failure to achieve substantial completion by the Guaranteed Completion Date, except that if Ameresco fails to achieve substantial completion within sixty (60) days of the by the Guaranteed Completion Date, such failure constitutes a breach of the EPCM Agreement by Ameresco.
The Total EPC Price includes, for the two (2) year period after substantial completion: (i) an availability guarantee providing for such facility to be available at least 97% of the time for each year, failure of which entitles SCE to liquidated damages for such failure; and (ii) a capacity guarantee providing for such facility to continue to meet its nameplate capacity during such period, failure of which requires Ameresco to augment or otherwise correct the facility as needed to maintain measured energy capacity at or above the guaranteed amount. The availability guarantee liquidated damages are calculated as 0.2% of the corresponding portion of the Total EPC Price for such facility for each whole 1% below the 97% availability threshold and are capped at 3% of such portion of the Total EPC Price during each twelve (12)-month period following substantial completion and 20% in the aggregate during the term of the EPCM agreement. SCE has the option to continue such guarantees for up to an additional thirteen (13) years beyond the initial two (2) years after substantial completion.
The EPCM Agreement includes other customary provisions regarding acceptance, change orders, insurance, indemnification and termination for customary events of default. Further, SCE can terminate the EPCM Agreement for convenience, in which case, Ameresco would be entitled to compensation for work performed though the date of termination as well as termination-related expenses.
Ameresco or its subsidiaries have in the past provided, and may in the future provide, energy efficiency and demand-side management consulting services to SCE, for which it or its subsidiaries have received, and may in the future receive, customary compensation from SCE for such services.
The press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.