What Is An Epc Company In Solar?
EPC stands for “engineering, procurement, and construction.” An EPC company is a company that provides a full range of services to deliver a complete turnkey solar system to a client. This includes design, engineering, procurement of equipment, construction, and commissioning of solar projects.
The EPC model first emerged in the 1990s as solar began scaling up into larger utility-scale systems that required expertise across multiple disciplines to deliver. EPCs were well suited to provide the full suite of services needed to handle complex large-scale solar projects from start to finish 1.
Today, EPC companies play a major role in the solar industry. They provide an efficient way for solar developers and asset owners to outsource the technical expertise, management, and coordination needed to complete solar projects on time and on budget. The EPC model helps the rapid growth of solar by allowing companies to scale quickly without needing to build large in-house engineering and construction capabilities.
Services provided by EPCs
EPC companies provide a comprehensive suite of services for solar energy projects ranging from initial design and engineering through long-term operations and maintenance.
The core services offered by EPCs include:
Engineering
EPCs handle all aspects of engineering for a solar project including site studies, system design, component selection, load calculations, permitting, and more (Industry Report on Mechanical, Electrical and Plumbing (MEP …). Their teams have the technical expertise to optimize system performance.
Procurement
EPCs procure all the materials and equipment needed for installation including solar panels, inverters, trackers, balance of system components, and cables (FALCON TECHNOPROJECTS INDIA LIMITED CIN). They leverage established supplier relationships to get competitive pricing.
Construction
EPC companies manage the civil works, installation, and commissioning of the entire solar plant. Their construction teams are trained to adhere to quality and safety standards.
Project Management
EPCs oversee the execution of the project from start to finish. They develop detailed project plans, manage work schedules, coordinate contractors and vendors, and ensure timely completion.
Operations & Maintenance
Many EPCs also provide long-term O&M services to optimize performance and maximize uptime after system commissioning. This can include monitoring, troubleshooting, repair, system upgrades, and more.
Benefits of using an EPC
There are several key benefits to utilizing an EPC company for solar projects:
Experience and expertise – According to GRS Energy, EPCs have extensive experience managing all aspects of solar projects from design and engineering to procurement, construction, and commissioning. They employ experts across various disciplines to ensure successful project execution.
Single point of contact – EPCs provide a single point of contact and handle everything from permitting to operations and maintenance, as noted by Solar Technologies. The client only needs to coordinate with the EPC instead of various vendors and contractors.
Turnkey solutions – EPCs deliver turnkey solar systems, handling all technical and logistical complexities, according to Insolergy. The client is relieved of project management duties.
Risk mitigation – EPC contracts transfer performance risks to the EPC company. They are obligated to deliver a functioning system on time and on budget.
Challenges working with EPC companies
Working with EPC companies on solar projects can present some unique challenges that need to be managed carefully. Three major challenges often center around communication, aligning goals, and change orders.
Effective communication is critical when working with an external EPC partner. However, communication gaps can occur due to different company cultures, lack of alignment on processes, or insufficient coordination. Maintaining open lines of communication, setting clear expectations, having regular status updates, and addressing issues proactively are key to minimizing miscommunications.
Aligning goals between the client and EPC is another common struggle. While both parties aim for project success, incentives may not always be aligned and priorities may differ. Careful contract structuring, win-win thinking, frequent collaboration, and transparency around motivations can help ensure the EPC is working towards the client’s best interests.
Finally, change orders mid-project can lead to friction. Scope creep, unexpected issues arising, and design changes can all result in claims for time and budget overruns. Strict change control processes, active risk monitoring, and flexible project management approaches can mitigate the impact of change.
With proper planning, robust contracts, and collaborative working arrangements, the challenges of partnering with EPC companies can be overcome for a successful project.
Types of EPC companies
There are several types of EPC companies that operate in the solar industry:
Large conglomerates like M. A. Mortenson Company offer full EPC services across many sectors including energy, healthcare, commercial, and more. They have the resources and experience to take on utility-scale solar projects.
Small regional firms like CS Energy focus on local solar projects within a certain geography. Their size allows them to provide more personalized service and support.
Solar-specific EPCs like SOLV Energy specialize exclusively in solar projects. They have deep expertise in solar but work on smaller scale deployments.
There are also hybrid solar developers/EPCs that both develop solar projects and provide turnkey EPC services. This vertical integration can help streamline the process. Ultimately the type of EPC a client chooses will depend on the size, scope, and needs of their particular solar project.
EPC project process
The EPC project process for solar projects involves several key stages:
Development
During development, the EPC conducts project feasibility studies, secures permits, acquires land rights, and finalizes the engineering design. This involves evaluating the solar resource at the site, transmission availability, interconnection requirements, environmental impacts, and financial viability.
Engineering Design
The engineering design includes the detailed system layout, structural design, transmission line routing, equipment specifications, and other technical drawings and documents. The design work aims to optimize system performance and minimize costs.
Procurement
Procurement involves purchasing all the equipment and materials for the solar project, including PV modules, inverters, trackers, mounting structures, cables, and more. The EPC leverages its purchasing power and supply chain relationships to obtain competitive pricing.
Construction
During construction, the EPC manages contractor crews to install the solar system and balance of plant equipment according to the engineering designs. Construction involves site preparation, installation of racking and modules, electrical work, and testing.
Commissioning
Commissioning is the final stage where the EPC startup engineers configure, test, and verify the system operation. This ensures the solar plant meets technical specifications and can synchronize with the grid reliably and efficiently. Source
Key EPC Contracts
The Engineering, Procurement and Construction (EPC) contract is central to delivering solar projects. It is a turnkey contract where the EPC contractor takes total responsibility for the engineering design, procurement of equipment and materials, and construction of the solar project from start to finish (Solarpack, 2019). EPC contracts clearly layout project requirements, technical specifications, costs, and timelines. They provide certainty around budget and schedule for project owners.
In addition to the EPC contract, an Operations and Maintenance (O&M) agreement is typically signed. This provides long-term services to operate and maintain the solar plant over its lifespan. O&M contracts outline preventative and corrective maintenance, monitoring, reporting, and performance guarantees. Well-structured O&M agreements are key to optimizing solar asset performance and returns (Spucches, 2019).
Choosing the Right EPC
When looking to hire an EPC company, it’s important to consider their experience, expertise, risk tolerance, and compatibility with your project goals. According to Selecting the Right Solar EPC Company, the EPC should have extensive knowledge of solar plant engineering and construction.
Look for EPCs with proven experience in solar projects similar in size and scope to yours. They should have expertise across financing, engineering, procurement, and project management. As explained on 5 Tips for Choosing the Right Solar EPC, you’ll want to confirm the EPC’s employees are properly licensed and trained.
Consider the EPC’s risk tolerance as well. More risk-averse EPCs may avoid complex projects or innovative designs. Make sure to find an EPC that fits with your project’s risk profile and desired level of innovation. Their work style and values should also be compatible with yours for the best partnership.
By evaluating experience, expertise, risk tolerance and compatibility, you can select the ideal solar EPC for your needs.
EPC trends
The solar EPC market is experiencing several key trends, including consolidation, vertical integration, and digitalization.
Consolidation is occurring as larger solar EPC companies acquire smaller competitors to expand their market share and geographic reach. There has been a wave of mergers and acquisitions in the solar EPC space as firms look to gain economies of scale and become more competitive on cost (Solar EPC Market Share 2023-2032).
Vertical integration is also becoming more common, with some solar EPCs bringing module manufacturing, development, and operations in-house. By controlling more parts of the solar value chain, EPCs aim to better manage costs, quality, and delivery timeframes (Solar EPC Market Size To Hit USD 398.74 Bn By 2032).
Finally, digitalization is transforming solar EPC operations, from design software to data analytics to drone surveys. EPCs are using technology to optimize plant performance, streamline processes, and reduce risks (Solar Engineering, Procurement and Construction (EPC) Market Size & Growth).
Future outlook for EPCs
The solar EPC market is expected to see strong growth in the coming years. According to McKinsey, global solar capacity is projected to grow over 15% annually through 2025, driving continued demand for EPC services1. Key growth opportunities for EPCs include international expansion, larger utility-scale projects, and innovative technologies like solar+storage.
However, EPCs also face challenges around labor constraints, supply chain disruptions, and margin pressures2. To stay competitive, EPCs will need to focus on operational efficiency, creative labor solutions, and adding value through new services.
Innovations in drone-based site surveys, digital twin modeling, and automated design and engineering will help optimize and accelerate the EPC process. Partnerships with developers on co-development business models could also emerge. Overall, strategic EPCs that leverage technology and collaboration will be best positioned to capture growth while maintaining healthy margins.
