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08th February 2016

Renewable energy deadlines

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At Hewitsons, one of our specialist areas is advising in regard to CleanTech energy projects, including to advise landowners undertaking installations based around solar or wind power, or anaerobic digestion technology. We also act for project companies and the contractors and consultants who specialise in this sector.

When it comes to some of the complex arrangements that can be involved in such a project, the central agreements will be managed under what is called an engineering, procurement and construction contract (EPC).

Under an EPC contract, the project contractor and its team will be required to deliver the engineering requirement for an employer project company and any related project sponsors. The principles behind an EPC contract include providing for a single point of responsibility on the part of the contractor, including for the project’s design and construction and the programme for its delivery. There will also be a fixed price for the works, with guarantees from the contractor in regard to performance levels once the project is up and running and generating energy.

The contractor is expected to take on the major risks (e.g. on price, programme, design, site, planning, procurement of statutory consents etc). It is for the contractor to negotiate such limits on liability as it can, and to agree on an acceptable price for undertaking the works that reflects the obligations that it is taking on.

From the perspective of the project company, it will seek to achieve as much certainty as it can under the EPC contract. It needs to achieve that level of certainty, including a fixed price, in order that it can separately negotiate arrangements for project finance and for the supply of energy arising out of the installation. The contractor will usually be expected to take the risk of say, currency fluctuations and changes in taxation, or losses which arise to the project company under any related agreements.

Programming is one of the big risks areas in such projects. The project company will look to pass on to the contractor the risks of a possible delay in completion of the project, including the date by when the project can start to produce the energy which will be supplied on to customers. There will also be dates for commissioning and testing to achieve accreditation where the project is based around receiving support from one of the Government’s financial schemes which encourage generation of power using sources of renewable energy.

At present the Government is altering its policy on support for renewable energy in the form of the Feed in Tariff (FIT) for small scale installations and the Renewable Obligation Certification (ROC’s) for larger scale projects. With some deadlines for accreditation due to expire in 2017, this means that many such projects are now under pressure to get up and running in order to meet deadlines or risk miss out on accreditation and associated financial support. 

Hewitsons has a range of expertise in regard to renewable energy and in advising related parties. Contact Colin Jones on colinjones@hewitsons.com for more information.