Turnkey flow battery system EPC contract price in Australia

What is an EPC contract?

Historically, EPC contracts have been the mainstay for large-scale energy projects in Australia, including BESS projects. An EPC contract is a fully integrated solution where a single contractor takes full responsibility for the engineering, procurement, and construction aspects of a project, excluding specified grid connection works.

What happens if the EPC contract is uncertain?

Any uncertainty in the EPC Contract may unfortunately see the EPC Contractor dealing with the offtaker or the System Operator thus possibly risking the relationship of the Project Company with its customer. Significantly, it is the Project Company which must develop and nurture an ongoing and long-term relationship with the offtaker.

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).

Can a split contracting model reduce EPC costs in Australia?

However, in the current market a limited number of contractors in Australia are willing to take on a traditional EPC contractor role. A split contracting model opens the market to more tenderers for various packages, which may reduce reliance on a limited pool of EPC contractors and reduce overall project cost.

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.

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.