- Risk Management: By having a single contractor responsible for the entire scope of work, a significant amount of construction risk is shifted from the project company to the EPC contractor. This reduces the complexity and potential liabilities for the project developers.
- Price Certainty: A fixed-price contract allows for clear budgeting and financial planning, as costs are defined at the outset. This provides predictability and reduces financial uncertainty associated with cost overruns or unforeseen expenses.
- Efficiency and Simplification: With a single point of contact, communication becomes streamlined, and project management is more efficient. This simplifies the client’s role, as they don’t need to coordinate with multiple vendors or contractors.
- Enhanced Lender Preference: Lenders often prefer fixed-price turnkey EPC contracts because they offer a simpler risk assessment. This preference can lead to better financing terms and increased confidence from potential investors.
- Performance Guarantees and Warranties: These contracts often include performance guarantees and equipment warranties that can be directly enforced by the project company. This provides additional security against potential performance issues or equipment failures.
- Compliance and Regulatory Alignment: Ensures that the project adheres to technical specifications and regulatory requirements, reducing the risk of non-compliance penalties.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-benefits-of-using-a-fixed-price-turnkey-epc-contract-for-energy-storage-projects/
