Should you choose an EPC contract for a solar project?
Given the significant monetary value of EPC Contracts, and the potential adverse consequences if problems occur during construction, the lowest price should not be the only factor used when selecting a Contractor. As noted earlier, an EPC Contract is one of a suite of agreements necessary to develop a solar project.
Will EPC contracts provide for the handover of a solar facility?
EPC Contracts will not provide for the handover of the solar facility to the Project Company, and the PPA will not become effective until all commissioning and reliability trialling has been successfully completed.
What is an EPC project?
EPC projects that are also known as ‘turnkey’ and as the contractor assumes responsibility for engineering services, procurement of materials, hiring of teams and materials, and execution of the work, among other tasks, to deliver the project ready to be operated by the client by a given deadline and with a number of guarantees.
What happens after a solar installation project is completed?
Once your solar installation project is complete and a quality inspection is finished, your solar system will be ready to hook into the grid and begin to transfer energy. Every component of your solar grid is tested, verified, documented, and maintained to perfection.
Should a solar project have a guarantee test?
In some projects, the guarantee tests occur after handover of the solar facility to the Project Company. This means the Contractor no longer has any liability for DLDs during performance testing. In our view, it is preferable, especially in project-financed projects, for handover to occur after completion of performance testing.
What are the disadvantages of an EPC contract?
Another major disadvantage of an EPC Contract becomes evident when problems occur during construction. In return for a guaranteed price and a guaranteed completion date, the Project Company cedes most of the day-to-day control over the construction.
EPC contracts in the solar sector
The Project Company needs only to turn a key to start operating the facility, hence EPC Contracts are sometimes called ‘turnkey’ construction contracts. The Contractor must deliver the
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