What is an EPC?
Introduction
EPC is an acronym given to companies that are prepared to provide services linked to three disciplines being; the Engineering, Procurement and Construction disciplines of a project. Generally EPC’s have adequate resources in at least one of the three disciplines and in exceptional cases adequate resources in all three disciplines. Contractors involved in the PV sector need to be able to balance cashflow, internal resources and contracted resources carefully whilst navigating the ebb and flow of projects during periods of varying demand. In order to remain sustainable this variation in demand often results in a number of the disciplines being outsourced as management teams are streamlined in order to remain profitable and competitive. The term EPC should not be downplayed as these contractors usually manage more than just the engineering, construction and procurement of a project. Likewise acting as installer is an occupation and field of specialization in its own right, and should be recognised as such.
Due to the dynamics in the solar PV sector and the complexities with terminology between different stakeholders, PQRS data previously excluded any reference to the term “EPC” and our database captured contractors without necessarily defining the roles of various stakeholders to the projects. There does seem to be an interest in industry to define and be recognised as specialists for the respective services offered to end-users.
Image showing contractual relationship between different contractors involved in a solar PV project
What is an EPC?
An EPC is defined by PQRS as a contractor that accepts the full responsibility for a solar PV project or part thereof. Full responsibility include services such as design, engineering, procurement, construction & project management. Any or all of the above mentioned services may be sub-contracted, outsourced or be provided using internal resources to the organisation. Being the EPC of a project often also requires synchronization of stock availability from different suppliers, predicting or hedging against exchange rates, making provision for additional structural and mechanical risks, advising clients on tax incentives, logistics, admin, finance, arranging for large volumes of equipment to be stored for extensive periods of time, health and safety related issues as well as arranging approvals to connect to the grid/utility.
What is an installer?
An installer is a contractor that is responsible for the mechanical, electrical and structural component of a PV project. It is common for installers to appoint sub contractors to assist with the installation part of a project. Installers may also advise the engineering team on recommended equipment for certain parts of the project. In larger projects installers may fulfill a Sub-contracted EPC or partial EPC function.
All contractors are not equal
Cost, size and complexity of projects vary substantially and these increased levels of responsibility should go hand in hand with some level of recognition. An EPC responsible for a 5kWp grid tied system cannot be compared to an EPC doing a 500kWp Off-grid system that needs to be synchronised with a 200kVa generator and likewise cannot be compared to an EPC commissioning a 5MW ground mount utility scale plant as each project is marked with unique project specific challenges.
Recognition
In future contractors will be listed with PQRS according to their associated field of expertise based on the range of installations being either as an installer or as an EPC linked to a specific project. Contractors are rated on the PQRS database according to the size of PV project based on the DC peak power of the PV modules at STC. Each contractor can be rated as an installer or EPC or both. Although we recognise that an EPC may appoint a separate PM, contractors fulfilling project management services are also rated under EPC’s as an EPC function is essentially a project management service coupled with additional responsibility.
Can an EPC be an installer?
EPC’s, Sub-contracted EPC's and installers are rated with different categories. Essentially a contractor can be both an EPC as well as an installer according to grading as three different gradings appear alongside one another, but can only be listed as the one or the other for a specific project. The designation would depend on the contractors responsibility within a given project. The boundaries of being both EPC and installer would rest in the internal resources of the organisation and can be further explained by looking at table 1 below. An installer changes in designation as soon as procurement of material for a project takes place and the installer then becomes an EPC with a partial EPC designation, because of the shift in responsibility.
Table 1 shows the differences between responsibilities of EPC's and installers on a solar PV project
Can there be more than one EPC on the same project?
Yes, however it is recognised that a Principle EPC would manage the complete site and sub-contract certain functions to a sub-contracted EPC. There can only be one Principle EPC on any given project.
Example
A contractor that would like to register and be recognised as an EPC or installer on the PQRS platform will be graded in the following manner. PQRS gradings make provision for EPC's, (Partial EPC's) Sub-contracted EPC's and Installers.
- Principle EPC’s are categorized with the letters “GE”
- Sub-contracted EPC's are categorised with the letters "GS"
- Installers are categorised with the letters "GI"
When data is sourced from facebook or a website, a GE5-GS5-GI5 is automatically assigned to any contractor on the PQRS database. Any other rating can only be activated with a client, stakeholder or peer review.
Acting as Principle EPC:
Once a contractor has completed at least 2 installations in the same range the contractor will be assigned with the GE rating for that range provided that the listing is accompanied with a client review and the feedback is positive. Where the review was not positive, it is assumed that some learning needs to take place and the lower range is allocated to the grading. Where only one installation has been completed in a specific range, the lower range grading is allocated.
Highest grading for Principle EPC’s would be GE0-GS0-GI5
Acting as sub-contracted EPC:
Once a contractor has completed at least 2 installations in any range the contractor will be assigned with the GS rating for the lowest range provided that the principle EPC has reviewed the listing and the listing is positive. Where the review was not positive, it is assumed that some learning needs to take place and the lower range is allocated to the grading.
Highest grading for sub-contracted EPC’s would be GE5-GS0-GI5
It is assumed that emerging companies would form JV’s with Principle EPC’s on larger projects. A sub contracted EPC that has completed the scope of a project successfully on a Range 2 project, should be able to act as Principle EPC for a range 3 project.
Acting as Installer:
In the event where the installer then completes 2 x Range 2 projects and manages to complete 1 x Range 3 project successfully with a positive customer review on the range 3 project, the grading will change to reflect GI3.
Highest grading for installer’s would be GE5-GS0-GI0
Doing an installation one level up will credit a contractor for one level down but not vice versa.
A dispute can be lodged and the level contested should the contractor not be happy with the assigned grading.