Once the construction phase is completed and the project becomes operational, there are still risks that are outstanding. Demand risk. This is a risk that your original projections are wrong. This is particularly an issue if you're selling services to the general public. It's very difficult to forecast public demand. Therefore, there's a big risk. That demand will be less than expected. One of the reasons the Euro Tunnel project fell over is that their original demand projections were much higher than reality. A way of avoiding this is to enter an agreement with one or a very small number of buyers. They will commit to taking the output, and that's the output of this SPV, a special purpose vehicle. By agreeing to buy, they've entered into what's called a take or pay agreement. They're now known as off-takers. This means that the SPV can offload the risk of deficient demand to those off-takers, and they will pay the price as part of their take or pay agreement. In reality, the Offtaker doesn't lose that money permanently when they don't take the production they pay anyway, but that payment would be set against future deliveries to them. The output the Offtaker was supposed to buy is then sold if possible, to someone else.

Operational risk. This is things going wrong in the operation of the project. It could be any number of things. It could be incompetence, it could be bad maintenance. It could be a kind of malfunction due to technology.

Normally, an O&M agreement is in place to govern this. This stands for Operational and Maintenance. There'll be some key service level agreements in that contract. If the agreements or requirements are not met, there'll be damages, which are payments to the SPV. The idea, again, is to transfer risk away from the SPV to the stakeholder that is best able to deal with that risk.

The last risk is supply risk, and that's potentially running short of raw material. This can obviously be very important for an electricity generator where they're taking, for example, gas to run turbines. In this case, what we'd expect to see is a supplier agreement where there's a required amount of quantity at certain dates, quality and price. If that's not delivered by the supplier, there would be a payment to the SPV, and this arrangement is called a put or pay contract. It's like the opposite of the take or pay we saw earlier. If the supplier can't deliver to the SPV, the SPV can use the money, the penalty to go out and source other supply. So this is trying to offload the risk outta the SPV again to the stakeholders, in this case, the supplier who's best able to manage them.