The Six Clauses That Decide How Your Solar EPC Contract Ends

Procurement & Contracts   8 min read

Contracts get read carefully at two moments: before signing, and when something has gone wrong. The second reading is the honest one, because that is when you find out what the words actually meant.

These six clauses account for most of the disagreements I have watched play out on commercial solar and storage projects. None of them are exotic. They are just the ones where standard wording tends to favour whoever drafted it.

1. The performance guarantee, and what it is measured against

A guarantee that says "the system will produce 850,000 kWh in year one" is nearly useless on its own, because production depends on weather. A bad irradiance year is not the contractor's fault, and no serious EPC will accept that risk.

What you want instead is a performance ratio guarantee, measured per IEC 61724-1, weather-corrected. That isolates what the contractor controls – design quality, installation, equipment selection – from what nobody controls.

Then specify three things the clause usually leaves vague:

  • The measurement window. A continuous 12 months, or a shorter test period? Both are used. A short test in a good season flatters the plant.
  • The reference sensor. Whose pyranometer, calibrated when, and who owns the data if you disagree?
  • The remedy. Liquidated damages, or an obligation to fix? Cash is cleaner to enforce; a fix obligation is worth more if the fault is systemic.

2. Liquidated damages that are actually proportionate

LDs for delay are standard. What varies enormously is whether they mean anything. A cap of 5% of contract value on a project where a six-month delay costs you a year of an incentive deadline is not protection, it is a rounding error.

Look at the interaction between the LD cap and your real exposure. If missing a grid connection window or a tax deadline costs more than the cap, the contractor is economically indifferent to the delay and you have written the contract badly.

3. Who owns the interconnection risk

This is the clause that ruins otherwise good projects. Utility approval timelines are outside both parties' control, and both parties know it, so the drafting tends to be evasive.

Decide explicitly: if the utility takes eleven months instead of four, who carries the cost of the crew standing down, the equipment sitting in a warehouse, the price escalation on modules? Silence here means you will argue about it later, at the worst possible moment.

The fair answer is usually a shared mechanism – contractor carries the first defined period, then costs are shared or the schedule resets. What is never fair is silence.

4. The defects liability period and what restarts it

Twelve months is common; twenty-four is achievable and worth pushing for on anything above a few hundred kW.

The detail that matters more than the duration: does repairing a defect restart the clock on that component? Without that, a contractor can replace a failing inverter in month eleven and hand you a device with one month of cover on a ten-year-life asset.

5. Equipment warranties, and who chases them

Module and inverter warranties sit with the manufacturer, not the EPC. That is fine until a module fails in year four, at which point you discover that "warranty support" meant the EPC will give you the manufacturer's email address.

What you want spelled out: who diagnoses, who pays for the labour to remove and refit (manufacturer warranties almost never cover labour), who covers shipping, and what happens if the manufacturer has exited your market. That last one is not hypothetical – the module industry consolidates constantly.

6. Termination and what you get to keep

If the relationship fails at 60% completion, what do you have? Do you own the design documents, the as-built drawings, the SCADA configuration, the monitoring platform login? Can another contractor take over, or is the plant configured around proprietary tooling only the original EPC can access?

This is worth ten minutes of drafting and can save an entire project. I have seen a client inherit a half-built plant with no accessible inverter configuration and no single-line diagram that matched what was on the roof.

A note on standard forms

FIDIC Silver Book and the various national equivalents are reasonable starting points, and using one signals seriousness. But they are general construction instruments – they do not know what a performance ratio is, and their defects provisions were not written with twenty-five-year generating assets in mind.

The particular conditions are where the solar-specific work happens. If the particular conditions are three pages, nobody has done that work.

The practical test

Read the contract as though the project has already gone wrong in the most boring way possible: it is nine months late, producing 8% under model, and the contractor is disputing whether that is a design issue or a soiling issue.

Can you tell, from the document, who is right and what happens next? If not, that is the clause to fix before signing.