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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.

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.

What happens if the EPC contract is uncertain?

Any uncertainty in the EPC Contract may unfortunately see the Contractor liaising directly with these third parties and possibly risking the relationship of the Project Company with key influencers, customers and long-term neighbours.

What is a bankable EPC contract?

A bankable EPC Contract is a contract with a risk allocation between the Contractor and the Project Company to the satisfaction of Lenders and their credit committees.

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.

What are the benefits of an EPC contract?

As noted previously, one of the advantages of an EPC Contract is that it provides the Project Company with a fixed completion date. If the Contractor fails to complete the works by the required date, it is liable for DLDs. However, in some circumstances the Contractor is entitled to an extension of the date for completion.

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