An EPC contract template is a document that a Project Owner or Sponsor uses to define the Project scope with the Contractor. It’s when you hire a single contractor to complete large-scale construction work or complex infrastructures. EPC stands for Engineering, Procurement, and Construction, and you generally use it with private entities. These contracts are increasingly used with energy providers to oversee the construction of a power facility.
Project Location: (Project..Name)
Project Address: (Project..Street) (Project..City) (Project..State) (Project..Zip)
Our EPC agreement for solar projects or other projects helps get you started when making a new contract. This document lists all of the essential terms which you can use it as is, but it’s also fully customizable, delivering the perfect document to start planning a project.
This EPC agreement (Engineering, Procurement, Construction), dated (Begin.Date) (“Effective Date”) is concluded between [Owner.FirstName] [Owner.LastName] (“Owner”) and [Contractor.FirstName] [Contractor.LastName] (“Contractor”). The Owner is represented by (Owner.Proxy), while the Contractor is represented by (Contractor.Proxy).
Both Parties acknowledge and agree that they have the right to sign this document and legally finalize this agreement. Individually, this document refers to the Owner and Contractor as a Party, while it refers to the entities collectively as Parties.
In the below section, outline the scope of the Project. That means defining what must be built, like a mini-grid facility, solar power plant, or other infrastructure. It also means you must clearly state the overview of what you expect from the Contractor/Owner.
The Contractor has a mandate to (Project.Scope) (“Project Operations”), and will undertake this engineering, procurement, and construction project with the private entity.
The Contractor aims to complete the Project Operations by the prospective date of (Date) (“Operation Date”), but the Owner acknowledges that unforeseen complications might delay the Project Schedule.
The Contractor is an experienced company in developing, constructing, and operating a (Project..Name). The Contractor agrees that they can design and build the facilities described above.
The Parties have therefore entered into this agreement to set up the terms and conditions of the arrangement.
“Assets” refers to the Project construction, facility, materials, and tools, which includes any installations on the premises and any relevant documents required to manage and maintain the facility.
“Change Order” is when a Party requests a change in the specified Project Operations, which the other Party must review and approve.
“Contractor” as the developer and constructor of the facility, located at [Contractor.StreetAddress] [Contractor.City] [Contractor.State] [Contractor.PostalCode] .
“Force Majeure Event” is an event neither Party can control, predict, or avoid, making it impossible to execute this EPC agreement in whole or in part.
“Performance Tests” means any testing either Party does to check whether the facility is working as it should and ready for commissioning as per the terms of this agreement.
“Project Operations” is when the Contractor i) finished the construction, maintenance, and repairs of the facility and Project.
“Project Operation Date” is when the facility is fully functioning and ready for the Owner to use.“Owner” is the entity that owns the Project or sponsors its construction and is located at [Owner.StreetAddress] [Owner.City] [Owner.State] [Owner.PostalCode] .
“Site” refers to the geographical land area where the facility will be and is located.The purpose of this agreement relates to the design, construction, operations, and maintenance of (Project.Name). This facility is built with the purpose of generating (Number) kW over a period of (Number) days/weeks/months.
With the below paragraph, you can change it should the Contractor not be responsible for maintaining the facility after completing the construction. It’s vital to add which entity owns it afterward and which is responsible for running the facility.
The Contractor performs the duties of designing, constructing, testing, and maintaining the facility on behalf of the Owner. Following the completion of the facility and the effective Project Operation Date, the Owner will own the facility, with the Contractor operating and maintaining it.
The EPC agreement will enter into force on the (Begin.Date) (“Effective Date”) upon (Entry.Process). It will remain in force for (Number) years and will automatically terminate on (End.Date) (“Termination date”), unless both Parties agree to extend the agreement.
The Contractor shall provide or perform the following work as per the terms of this agreement:
If the Contractor must design any part of the Project, outline below all the specific responsibilities of the design.
Add all construction operations the Contractor must perform, such as Site preparation, digging, disposal of materials, etc.
Construction:
You should add anything the Contractor must procure at this part. That includes any local agency approvals, permits, licenses, certificates, etc.
Below, you can add labor requirements like the needed workforce, any third-party developers, service providers, or tester agencies.
Clearly outline what materials the Contractor provides, as the Owner must source any other required materials. This section can include the specific generators or panels needed in a facility.
Unlike above, where you add the specific company or entity doing the testing, here you add the process. List the factors the Party must test and how the testing will go.
If the Project document doesn’t mention any specifics in the above sections, add them here. This part is a miscellaneous section that helps ensure a clear understanding of the job scope.
The below rights apply to the affected Party, as per the terms of this agreement:
The rights of the Contractor:
To receive monetary compensation as set out in this agreement for the engineering, procurement, and construction of the facility;
The exclusive right to design and construct the facility;To terminate the agreement in the event of default while still receiving the associated Termination Compensation.
The rights of the Owner:
To receive regular reports and updates on the progress of the Project operation; Receiving a fully-functional facility, as per the terms of this agreement; Monitor the Project Operations;Upon reasonable prior notice, access the Site and the books and records the Contractor holds of this Project.
The Obligations of the Contractor:
Act as the sole Contractor for the Project Operations and carry the responsibility of completing it;Undertake all the required work to design, procure, and construct this facility according to the specifications of this agreement;
Keep updated records and inventory of the Assets; Dispose of hazardous materials according to the laws of (State).The Obligations of the Owner:
Procure and hold any permits or approvals allowing the Contractor to work on the Site and construct the facilities;
Make payments for the work as per the agreement;Promptly respond to notices or inquiries, and make available an appropriate authority with the right to make decisions regarding these facilities.
The Parties agree that they are duly organized under the laws of (State) and have the full authority and power to perform their duties and other obligations specified in the agreement. The Parties also agree that they have the financial ability to perform the required tasks and comply with all applicable laws.
The Contractor agrees that they have visited and inspected the Site and identified no complications. The Contractor or representatives agree that they are familiar with the topography, access rights, roads, and soil condition of the Site.
Both Parties agree not to subcontract or assign any obligation, interest, right, or benefit to a third party without the written consent of both Owner and Contractor.
The payment terms also include a payment schedule, fees, and other monetary rights. Further, you should add the payment methods and currency, which ensures that you receive or make payment in a manner that suits you.
The total payment expected for the Project Operations prescribed in this document is $(Payment.Total). However, this payment is broken down according to the schedule below:
Should any of the following events occur which increases the costs of work, the Owner is obliged to pay all expenses above the total amount:
Uninsured Force Majeure Event; Governmental requirements; Change Order; The Owner is uncooperative with the Contractor.The Owner will pay the total amount upon the Contractor completing the facilities on the Project Operation Date. The Contractor shall prepare and submit an invoice and a final report of the work. The Owner must review this invoice and report and settle the outstanding balance of the total amount within (Number) days of the receipt of the invoice.
If the Owner fails to make payment by the specified date, an interest rate of (Number)% will apply until the Owner pays the outstanding amount and owed interest.
Both Parties understand that a Change Order might delay the specified project period and incur additional costs. The Owner must carry any expenses of a Change Order due to an uninsured Force Majeure Event or by the request of the Owner.
Any costs resulting from a Change Order that the Contractor requests and the Owner approves will be borne equally by both Parties. Should the pricing change due to a Change Order arising from an error or commission from a Party, that Party will carry the costs.
This section clarifies who owns the facilities at what stage of the development. It’s crucial to clearly state ownership here, especially if you’ve designed something or the other Party has intellectual rights to something.
Once the Contractor completes the Project Operations and testing, the Contractor will hand over the facility and all its materials, tools, and installations into the ownership of the Owner. While the Contractor has the legal rights to use all patents, copyrights, and other intellectual property during the construction of this facility, they will hand it over to the Owner upon completion.
Testing is a critical section in this EPC agreement for solar projects. It helps ensure that both Parties are happy with the final result. It also ensures that you have proof that everything is working as it should, and no complaints can be made after the fact.
At the completion of the Project Operations, the Contractor will compile a report on any unfinished work, along with sending a status report to the Owner. Once the Owner has reviewed the information, they can initiate performance testing by an Independent auditor to ensure everything works as it should. Once this is confirmed, the Contractor can complete any unfinished work and hand over a final report once it is finished.
The Contractor shall not be held liable for any defects, deficiencies, or costs arising from a Force Majeure Event, everyday wear and tear, or misuse and negligence by the Owner.