# Negotiation Patterns

Recurring Tier 1 and Tier 2 patterns for the offer classes MicroLink sees most. Use as a checklist when building Section 6, not as a substitute for the offer-specific analysis. Every position needs a target and a walk-away; a position without a walk-away is a wish.

## Power supply offers (BTM generation, PPAs, tolling)

**Pre-commitment backstops (usually Tier 1).** If the offer asks us to fund or backstop equipment before their FID: cap the dollar exposure; secure it with a first-priority interest in the slots/equipment it funds; reimbursement at FID with interest; a defined liquidation waterfall; and test the alternative of the sponsor warehousing the risk instead (a sponsor with a large balance sheet can carry equipment residual risk better than we can, and asking exposes whether they believe in their own project). Never assume liquidation at par: research the secondary market for the specific units, and discount for 60 Hz vs 50 Hz, model vintage, and cycle risk.

**Flat capacity vs load ramp (usually Tier 1).** Committed capacity should phase with our contracted tenant load, not start flat at COD. Reference point: the AEP Ohio data center tariff settled at 85% minimum take with a four-year ramp; a private BTM offer demanding 100% unconditional from day one is asking for harder terms than an Ohio regulator granted a monopoly utility.

**Indexation without bands (Tier 1 when uncapped).** Capex or cost indexation is market in an inflating equipment market, but only with: a tight deadband, a hard cap, open-book EPC/OEM pricing, and ideally most-favoured pricing. Uncapped indexation converts a fixed-price offer into cost-plus with extra steps.

**Reserve or overbuild billing (Tier 2).** Paying on contract capacity while they install more: either pay only for firm delivered capacity, or share the value of the reserve (its merchant sales, its expansion optionality).

**Term length (Tier 2).** Twenty-year flat obligations are debt-equivalent (S&P imputes a risk-factored share of the NPV of capacity payments; lenders will size it). Push for a 10 to 12 year initial term with extension options, or a step-down/conversion when the structural picture changes (grid arrival, technology shift). Longer term is a legitimate Tier 3 trade for a lower unit price, but priced deliberately, not defaulted into.

**Grid/merchant transition value (Tier 2).** Any plant with a planned later grid interconnection has a second revenue life. The offtaker funded the asset; the share of merchant, capacity market, and ancillary revenue must be a locked percentage in the PPA, not a gesture. Undefined sharing language goes on the Section 5.2 question list and the term stays Tier 2 until a number exists.

**Fuel and commodity (usually accept).** Offtaker bearing fuel under pass-through is market-standard. The negotiable pieces are transparency (we see the purchase prices), scheduling control at scale, and a tolling conversion right if supplying our own fuel later proves cheaper.

**Remedies (Tier 2, non-optional).** COD liquidated damages, availability guarantees with capacity payment abatement scaled to shortfall, and outage step-in rights. Their absence from an offer is a Section 5.2 item, not an accepted position.

## Equipment purchases

Deposit norms in a supply-constrained market run 20 to 25% and nonrefundable; the negotiation is rarely the percentage, it is: slot assignability (can we transfer the slot to another site or buyer), milestone-linked payments vs front-loading, delivery LDs, price-lock vs surcharge exposure between order and delivery, and warranty/performance terms at the specific duty cycle.

## EPC and construction

Fixed-price full wrap vs cost-plus is the primary axis; in between, target-price with pain/gain share. Tier 1 items when the offer is soft: a hard not-to-exceed, schedule LDs sized to our carrying cost of delay, and design responsibility sitting where design capability sits.

## Colocation and offtake (MicroLink as seller)

Reverse the lens: the patterns above are what sophisticated counterparties will run at us. Expect asks for ramp matching, exposure caps, remedy schedules, and term flexibility, and pre-decide our positions before their review lands.

## Trade candidates (Tier 3, all offer classes)

Priced concessions we can offer: longer term for lower unit price; exclusivity bounded by scope, geography, and time; committed expansion or follow-on volume; public reference/case study rights; earlier or larger deposits against price or security improvements. Each priced before offered, each mapped to the specific Tier 1 or Tier 2 movement it buys.
