The project company may be required to deliver services in bulk to a single offtake or ("Bulk"), or directly to consumers ("User"). Under a Bulk project, the project company delivers services to a utility or a single off-taker, the project company's obligations and the management of the service delivery is generally more straightforward. A Bulk project usually means that the project company is not responsible for customer service, mitigating social risk, the implications of social policy and a comprehensive intervention of a regulatory authority.
A User project involves a project company that delivers services directly to consumers, with all associated customer service, billing and collection risks. This involves a complex relationship with individual consumers, consumer groups, the local community, and political authorities associated with those consumers, in particular regulatory authorities. The definition of service delivery and the mechanisms for monitoring and managing that service delivery may need to be flexible in order to adapt as consumer requirements change, for example as demographics change.
So, the construction and operation of a power generation facility that delivers electricity to the local utility would be a Bulk project; while the running of a water utility, delivering water to consumers would be a User project.
It should be noted that a variety of services may fall under the User structure. A User project may only require the project company to take on billing and collection obligations, with no real service provision to consumers.13 Equally, a Bulk project places an obligation on the project company to deliver services to the grantor or an offtaker. However, often, the revenue stream for a Bulk project comes from the grantor or offtaker, but the service is delivered to consumers (a User-Fee project). The credit risk of the offtaker may suffer if it is not able to collect from consumers, or if consumer tariffs are too low (see discussion below of revenue sources).
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13 This formulation is used in water and electricity distribution systems to help improve billing and collection where public utilities are often weak.