Change-in-Law Clauses in Solar PPAs
Change-in-law clauses determine who carries the cost when policy changes mid-contract. Anti-dilution, pass-through and force-majeure mechanics explained.
Why change-in-law clauses exist
A 25-year PPA spans 5 UK governments, multiple chancellors, and significant policy churn. Change-in-law clauses allocate the financial impact of that policy churn between off-taker and provider.
The three main pathways
Pass-through
Any new tax, charge or regulation that increases the provider's cost gets passed through to the off-taker via tariff uplift. Common but heavily limited by off-takers.
Equal sharing
Costs split 50/50 between off-taker and provider. The "fair" middle ground.
Bear and indemnify
Each party bears the cost of changes that affect them directly. Most off-taker-friendly but rare.
What changes most commonly trigger
- Climate Change Levy rate increases
- BSUoS / TNUoS structural reform (ongoing)
- REGO scheme changes
- SEG floor rate adjustments
- New emissions trading scheme costs
- Planning regulation changes affecting solar
What to negotiate
- Mutual change-in-law (not just provider-favourable)
- Materiality threshold (no pass-through for <5% impact)
- Disclosure obligations (provider must show calculation)
- Right to terminate if change-in-law triggers >15% tariff change
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