DG-107: Are the payments under the applicable supplier contracts based on the RECs actually produced by our solar systems or based on the RECs that would be expected from these systems given their sizes and the capacity factors? If based on actual production, what would happen in an extremely cloudy year?

Under the applicable supplier contracts, payments are based on RECs delivered (so, the production of all the systems under contract, subject to the Maximum Annual Quantity in each Delivery Year). The applicable supplier contracts are structured on a portfolio basis and are not structured on a system-by-system basis. The applicable supplier contract will specify a Maximum Annual Quantity to be delivered, which can be supplied from any of the systems identified as part of the approved bids (or identified subsequently if the approved bids initially specified a forecast quantity) and allocated to the applicable supplier contract with the utility.

If it is an extremely cloudy year and all of your systems produce less than expected, there are two consequences. First, REC payments will be based only on the RECs that you deliver, so that these payments may be lower than those associated with the Maximum Annual Quantity.   Second, if you do not deliver up to the Maximum Annual Quantity, you must provide all of the RECs produced by the systems associated with the applicable supplier contract with the utility; you must not be withholding RECs from the utility or selling RECs from such systems to another party. Such action would be a condition of default under the applicable supplier contracts.