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Engineering, Procurement and Construction (EPC) contracts are the most common form of contract used to undertake construction works by the private sector on large scale and complex infrastructure projects. Under an EPC contract, a contractor is obliged to deliver a complete facility to a developer who need only 'turn a key' to start operating the facility; hence EPC contracts are sometimes called turnkey construction contracts. In addition to delivering a complete facility, the contractor must deliver that facility for a guaranteed price by a guaranteed date and it must perform to the guaranteed level. Failure to comply with any requirements will usually result in the contractor incurring monetary liabilities.
Due to the flexibility, the value and the certainty derived to sponsors and lenders, EPC contracts are being used as the main form of construction contract by project sponsors bidding for projects under South Africa's Renewable Energy Independent Power Producer (RE IPP) Procurement Programme.
This paper is set out in two parts. Part 1 outlines the current context of renewable energy policy and legislation in South Africa, lessons learned from the lenders' bankability requirements and other key issues arising in relation to EPC contracts in the context of the RE IPP Programme. Part 2 sets out the key features of EPC contracts in the context of renewable energy projects more broadly.
Although the RE IPP Programme covers a number of types of renewable energy technologies (discussed further over the page), this paper focuses specifically on wind energy and the key issues arising in EPC contracts for wind projects.
To learn more, read or download the free complete detailed 57 page report EPC Contracts for Wind Energy Projects - South African RE IPP Programme - Lessons Learned From Phases 1 and 2.
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