How do power project EPC contracts work?
As a result, power project EPC Contracts normally impose two types of PLDs, one for output (ie how many megawatts the power station produces) and one for heat rate (ie how much fuel the power station burns to generate the required output of electricity).
Are EPC Contracts Applicable to all sectors?
However, the majority of the issues raised are applicable to EPC Contracts used in all sectors. Prior to examining power project EPC Contracts in detail, it is useful to explore the basic features of a power project. By this we mean industry sectors including power, oil and gas, transport, water and telecommunications.
Will EPC contracts provide for the handover of a power station?
Clearly, EPC Contracts will not provide for the handover of the power station to the Project Company and the PPA will not become effective until all commissioning and reliability trialling has been successfully completed.
How does an EPC contract interface with other agreements?
As noted earlier, an EPC Contract is one of a suite of agreements necessary to develop a power project. Therefore, it is vital that the EPC Contract properly interfaces with those other agreements. In particular, care should be taken to ensure the following issues interface properly: intellectual property.
What is a performance specification in an EPC contract?
Performance specification: Unlike a traditional construction contract, an EPC Contract usually contains a performance specification. The performance specification details the performance criteria that the Contractor must meet. However, it does not dictate how they must be met. This is left to the Contractor to determine.
Are EPC contracts bankable?
Given the role liquidated damages play in ensuring EPC Contracts are bankable and the consequences detailed above of the regime not being effective, it is vital to ensure they are properly drafted to ensure Contractors cannot avoid their liquidated damages liability on a legal technicality.
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