The commercial operation date, longstop dates and delay damages: what a late solar plant costs the model

By SolarQuant Editorial. Published 2026-10-05. Last updated 2026-10-05.

A PPA starts paying only from the commercial operation date, so every month of delay is a month without revenue while the loan still accrues interest. Delay damages add a payment from the seller on top of that loss, and a longstop date decides when the buyer may walk away. In the example, the lost revenue and interest are larger than the damages, and the longstop date is the real limit on the project.

What example does this article use?

The example is an invented 40 MWp ground-mounted solar plant in no named market. One buyer takes the power at the plant substation and pays in USD under a 20-year PPA that runs from the commercial operation date. Construction takes 12 months, and a senior loan of USD 25.1m is sized so that debt service equals CFADS divided by 1.30x. Annual periods are used for simplicity; real deals usually use six-month periods.

Item Figure
Plant and contract 40 MWp, one buyer, delivery at the plant substation, USD payments, 20-year PPA from commercial operation
Year 1 generation P90 70.0 GWh (1,750 kWh per kWp); P50 76.0 GWh (1,900 kWh per kWp)
Degradation 0.5% a year
Tariff USD 80 per MWh, flat for 20 years
Lender's case (P90) revenue USD 5.6m in year 1; USD 106.8m over 20 years
Payment Monthly invoices, paid 60 days after invoice; average monthly revenue USD 0.467m
Payment security Letter of credit from the buyer's bank, 3 months of revenue, USD 1.4m
Year 1 costs and CFADS Operating costs USD 1.0m, tax USD 0.4m, CFADS USD 4.2m
Funding Total USD 40.0m; senior debt USD 25.07m (62.7% gearing) over 12 years at 7.0% all-in; equity USD 14.9m
Year 1 debt service USD 3.231m, so DSCR 1.30x (lock-up 1.20x, default 1.10x)
Delay case (invented) Commercial operation 3 months late loses USD 1.4m of year 1 revenue; interest on the full loan for 3 months is about USD 0.44m
Delay damages (invented) USD 6,000 a day, capped at 180 days (USD 1.08m)
Longstop date (invented) 6 months after the target date

All figures are invented for illustration. The delay terms are one case on this plant, not a market norm.

What are the commercial operation date and the longstop date?

The commercial operation date (COD) is the date the plant is ready to deliver power, and it is the start of the PPA's paid term. One public guide says the term of a renewable energy purchase agreement is "usually measured in the number of years from the commercial operation date" (World Bank, 2012). A US legal guide says the date also decides "whether the project has avoided liquidated damages by achieving its 'guaranteed commercial operation date'" (Stoel Rives).

A longstop date is the last date by which COD must happen before the buyer may end the contract. In a public Jordanian standard PPA it is defined as "the date falling three (3) months after the Required Commercial Operation Date". The target date and the longstop date therefore sit apart, and delay damages usually run between them.

Damages stop accruing at month 6, the same point the buyer may terminate
Figure 1. timeline of the invented example · target date to month 6

In the example the target date is month 0, damages run for 180 days, and the longstop date falls at month 6. The two clocks end together here only because the invented terms were set that way.

How do contracts set delay damages?

Delay damages are an agreed payment from the seller to the buyer for each day COD is late, in place of proving the buyer's actual loss. Public sources show three main variants, and a single PPA may use only one.

Variant Public example How it works
Daily amount up to a maximum World Bank guide (global); Stoel Rives (US); a model solar PPA for a US utility RFP; Indonesia (as reported in a 2025 study) A fixed sum for each day of delay. The World Bank guide says damages are often calculated "by multiplying a dollar amount by the number of MWs of contracted capacity" for each day of delay. The US model PPA sets its cap at the daily damages multiplied by 180 days. The Indonesian study reports a maximum of 180 calendar days.
Pre-estimated damages set outside the PPA India, standard solar PPA The seller or its contractor pays "genuine pre-estimated liquidated damages", with the rate taken from the tender document attached as a schedule.
Penalty on payments, energy or security Latin American auctions (Mexico, Chile, Peru, Brazil), per an IDB study Mexico: a penalty of 5% of the monthly payments under the PPA. Chile: a fine per GWh for postponing a project. Peru: penalties deducted from the guarantee. Brazil: a 5% construction bond.

In the example, the invented damages of USD 6,000 a day are a daily amount, and the 180-day cap equals USD 1.08m. The figure of 180 days is the example's choice, not a market norm.

What it changes in the model: delay damages are a cost line for the project company, paid to the buyer, and they are capped. Our reading is that the cap, and not the daily rate, sets the most the project can owe, so the model should carry the cap as an input.

What extends the commercial operation date?

An extension moves the target or longstop date, or switches off damages, when the delay is not the seller's fault. Public sources show three treatments.

The World Bank guide adds that extensions for force majeure "should not necessarily be day for day", because a short delay can cost a whole construction window.

What it changes in the model: an excused delay switches off damages but does not bring the revenue back. In the example, if the 3-month delay were excused, the USD 0.54m of damages would not be payable, yet the USD 1.4m of lost revenue and the USD 0.44m of interest would still fall on the project. Under deemed commissioning the buyer pays for the electricity deemed supplied, so that case differs sharply.

What does a delay cost the project?

A delay costs the project the revenue it does not receive, the interest on the loan while the plant earns nothing, and any delay damages it owes. In the example, 3 months of delay loses USD 1.4m of year 1 revenue, adds about USD 0.44m of interest on the full loan, and costs USD 0.54m in damages (90 days at USD 6,000).

A 3 month delay costs the project USD 2.38m, USD 0.54m of it damages
Figure 2. invented example · year 1 P90 revenue, USD 25.07m loan at 7.0%, damages USD 6,000 a day, months of 30 days

Damages are the smallest of the three parts: USD 6,000 a day against about USD 20,000 a day of lost revenue and interest. Our reading is that the cap, USD 1.08m, matters less to the project than the months of lost revenue, because revenue keeps being lost after the cap is reached. The chart holds costs at the base case and ignores extra construction costs, lender fees and any change in the tariff.

What happens at the longstop date?

At the longstop date the buyer gains a right to end the PPA if COD has not happened. Public sources show three ways of reaching that point.

Stoel Rives also says construction period security is "usually required in an amount equal to the per diem amount of any delay damages" multiplied by the days between the target date and the drop-dead date. In the example that sum would be 180 days at USD 6,000, or USD 1.08m.

What it changes in the model: the longstop date is a cliff, not a slope. In the example, a PPA ended at month 6 would leave a built plant, USD 25.1m of senior debt and no contract, so lenders look at it before they look at the damages. See "PPA termination payments" for what is owed when a PPA ends later in life, and "PPA conditions precedent" for the conditions that must be met first.

How do you model it?

  1. Enter the target COD, the construction period and the longstop date as inputs, with the longstop date as a number of days after the target.
  2. Add a delay input in days. Move the start of revenue, the PPA tariff and the PPA term by that number of days.
  3. Keep the loan drawn and the interest running during the delay. In the example, 3 months adds about USD 0.44m of interest.
  4. Add delay damages as a cost line, limited by the cap, using the formula below.
  5. Add a switch for an excused delay that sets damages to zero but leaves the revenue and interest losses in place.
  6. Add a test that flags the case when days late exceed the longstop date, because the buyer may then terminate and the case should stop.
  7. Show who funds the extra cost. In the example, the 3-month cost of USD 2.38m is about 16% of the USD 14.9m of equity; this ratio is our own calculation from the example.
damages=daily rate×min(days late,cap in days)\text{damages} = \text{daily rate} \times \min(\text{days late},\ \text{cap in days})

For the example, the damages are USD 6,000 × min(90, 180), which is USD 0.54m.

What are the common mistakes?

Frequently asked questions

What is the difference between the target COD and the longstop date?

The target date is the date the seller aims for, and damages usually start after it. The longstop date is the later date after which the buyer may terminate. In the Jordanian standard PPA the longstop date is three months after the required date.

Who pays delay damages?

In the public sources opened for this article, the seller pays the buyer. The World Bank guide calls it an "obligation of Seller to pay Purchaser a fixed amount of money for each day of delay".

Are delay damages capped?

Often, according to the World Bank guide: "Liability for damages due to a delay or event of default are often capped". It adds that the cap for delay damages "may be substantially less than the cap for overall damages following an event of default".

Does a force majeure delay extend the date day for day?

Not necessarily. The World Bank guide says extensions "should not necessarily be day for day". Each contract states its own rule.

What do lenders look for in these clauses?

A WBCSD review says lenders "will want to ensure that there is limited risk of the corporate PPA falling away before a project is completed". In model terms, that points to the longstop date and its extensions.

Is the 180-day cap in the example a standard figure?

No. It is an invented figure chosen for the example. Public sources show other forms of limit, such as a percentage of monthly payments or a fine per GWh.

Sources

Pages opened on 5 October 2026. The example project is invented and has no source.