Solar MW PV Power plants How to choose an EPC contractor A check list and Guide

How to choose an EPC contractor, page 1

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uilding MW scale solar power plant is at once a simple and a complex task. It is a huge investment that will pay-back over several years, and hence careful consideration needs to be given for choosing the right technology and execution

How to choose an EPC contractor, page 2

Many start ups and many wannabe consultants are claiming to be EPC contractors, in addition to the panel manufacturers themselves. How do you assess capabilities? How do you determine who can win that coveted EPC contract from you? What kind of business / pricing model should you work with? Here is a guide. We have also provided a checklist for evaluation of a EPC vendor.

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What is involved in EPC contract for MW solar power plants?

Engineering:
PV design & inverter selection:
There are many daunting questions and many different answers. It is not as simple as some EPC contractors make you believe.

Do you make it with high voltage modules or low voltage modules? Do you want 10 x 100 KW per MW or 2 x 500 KW per MW of inverter? Which voltage range do you choose? How many in series and how many in parallel? Which make of inverter suits the temperature range and hence the voltage range? What will be the extremes that the design can take from a voltage and current perspective, and what are the possibilities of that in the chosen location? On the inverter side modularity and efficiency curves based on temperature conditions come into play as well. How to choose an EPC contractor, page 3

Electrical design:
Line losses, wiring selection, weathering patterns for wiring this again is very involved. What kind of junctions, where and how the entire wiring is circuited again has design complexities and considerations.

Structure design:
It is not simple fix it at degrees equal to latitude thing. Some companies who have experience elsewhere in the world have reported that good structure design can improve productivity by as much 10% while reducing capital costs. This is an experience thing, and not purely a theoretical calculation.

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In another note, the system is as strong as the weakest component. If the structure does not last as long as the panels, the best quality panels can go waste and unproductive. Need to carefully evaluate alternatives on design as well as materials to ensure they last long.

Civil design:
Again, the longevity can be greatly affected by this. As an example, there could be possibility of rain logging in the site, and we may need to raise the panels up. But, if there are maintenance issues when water is filled in the site we may still need access for the panels hence there may be a need for platforms that ensure access to the panels. This is just one example. There are so many other considerations that a good civil design can identify and provide for.

Evacuation design:
There are strict norms with which EB will accept How to choose an EPC contractor, page 4 the power, and design has to ensure that all those conditions will be met at all scenarios. Specialist consultants are needed for this, and not any other electrical contractor.

Maintenance and monitoring design

Once you build the plant, it needs to be constantly monitored for optimized performance and hence a good ROI. Cost-benefit needs to be analysed with respect to the best-in-class monitoring solution.

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Do you want to install measures per panel, or per array, or just live with inverter level checks? Do you want to monitor the solar data? How does all this get reported? Who does what? What spares should be kept? How is exceptions thrown? These are some considerations in designing the right maintenance and monitoring system. Every system cannot be same because the location, manpower available and accessibility for different sites are different.

Procurement:
PV modules and inverter
This is by far the most important factor that can affect the initial capital cost, longevity of the system and performance of the system. Many considerations including how the panels are built, what cells are used, what is the longevity of the company building it, what quality are they willing to deliver for an Indian customer, what importance they attach to this project, flexibility of contract, and even packaging and transport of panels come into play.

Other BOM
How to choose an EPC contractor, page 5 Again none of the components can be taken lightly as the system will be as strong as the weakest component. Every single component has importance in the long run.

Commissioning:
Project Management
Orchestrating all the pieces to come in place, as well as making sure that the engineering specifications are met during execution is a very complex task, and one that requires organized and structured people.

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Government Liaisoning
Networks, ability to get work done, ability to get paperwork done are skill sets needed for this.

Team for execution: Major players in this phase are:

PV Panel supplier Inverter supplier Electrical contractor Evacuation contractor (different from electrical) Civil contractor including foundations Structural designer and contractor (different from civil)

How to choose an EPC contractor, page 6

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What are the factors in choosing an EPC contractor

Factor 1: Who are the kind of players?

-- New independent Integrators/consultants -- EB & other ex-government employees -- New integrators with foreign tie-ups -- Panel manufacturers -- (Rare) Indian integrators with experience abroad -- (Rare) Integrators with Indian experience New independent integrators/consultants: The huge opportunity thrown by solar mission and India's newfound love with solar energy has peaked the entrepreneurial activity in India, and bright minds are jumping into the bandwagon. No doubts some of these will succeed in creating good companies that makes a difference for the solar field. But, the question will be how do you pick the winner from the whole load of wannabe's? You can choose them if: a) You know for sure that they are committed to persevere through the solar industry and they are reliable and not just jumping to cash in on a trend. How can you find this? You can find this by understanding their business interests, their investment into the solar industry, their team and whether full-time or part-time, and so on. b) You are willing to bet on someone because you know them, or you have some other interest in giving them the business.

How to choose an EPC contractor, page 7

EB & other ex-government employees No doubts, Government liaisoning is a huge part in constructing and running a solar power plant. No doubts, such consultants are needed for the power plant. But, at the end of the day, you need to decide what the relative importance is. These people can ensure that the project is up and make sure that the billing and payments happen, etc. But, how can they ensure that the plant is constructed well which is the essence of EPC contract?

You should certainly have these consultants as part of the team either directly as part of the team brought in by EPC contractor.

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New integrators with foreign tie-ups Once again these are similar to independent consultants, but may bring strength more than the independent ones. Commitment of the foreign player for Indian market is an important consideration, and the experience of the foreign player in similar climate and dust conditions is an important factor. There is a HUGE difference between designing for Germany or the USA and designing for India. As an example the advantage of MPPT the touted feature in many inverters is less in tropical countries than in cold climates. It is not to say that MPPT is useless, but it is not as advantageous in hot climates as the voltage bands are lesser. This is not something that may even have been considered by the foreign collaborator. In essence, experience in similar climates and similar environments is an important factor. Equally important is the collaborator's commitment and responsiveness. Hundreds of wannabe integrators from India are approaching the dozens of qualified integrators, and many integrators are not keen on India. So, just a name attached is not enough you need to evaluate the responsiveness, availability of the collaborator and of course the relevant experience. Another aspect is local supplier tie-up. A great foreign collaborator can help in getting a good design and good solution, but execution locally means local tie-ups. Now that Indian Government has stipulated use of India made panels a good supplier tie-up to get the best price and best quality is also a pre-requisite for a good EPC contractor. Minimal tie-ups needed for execution are How to choose an EPC contractor, page 8 You also need to evaluate the long term plan for the collaboration. This is one of the best options, if all the above conditions are met.

Panel manufacturers

These are seemingly excellent choices. They make the heart of the technology and hence they probably are the best right? Not necessarily. First, their main business is not integration or EPC, but manufacturing. EPC may just be a value-add for them as a manufacturer or the way to push their panels. Second they may have the best expertise in building panels but designing the system using panels is a whole different ball-game. Third getting them as EPC contractors virtually seals the possibility of buying PV panels and inverters from any other manufacturer. Fourth the India based module manufacturers have been export oriented for a long-time. After all, Indian market is just opening up. They may or may not have domestic bandwidth for execution.

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Having said all this, the option is one of the best options particularly if the manufacturer is committed to Indian market which can be measured by dedicated sales and execution staff for India, and if the manufacturer is committed to EPC meaning, they are not back-to-back sub-contracting with another independent EPC contractor in which case you are better off engaging such EPC contractors directly.

(Rare) Indian integrators with experience abroad (Rare) Integrators with Indian experience

These are rare-finds. Given the sudden raise in market demand, these players are the best suited and the most sought after. Hence it is important to find how they treat your project. If they are treating your project with good level of importance not just from an enthusiastic sales person, but from some execution and design people this can be a very safe bet. But, it is very unlikely in the current scenario.

Factor 2: Experience: As mentioned above, Indian experience is very limited. Foreign experience in executing such large projects is the only guide to go with. More evaluation needs to go into checking the relevance of experience for the Indian climatic and Indian environmental conditions.

How to choose an EPC contractor, page 9

Factor 3: Technology Tie-ups As we have discussed under the type of player, it is important to see where the experience of design, execution and maintenance comes from.

Factor 4: Supplier tie-ups Very important aspect in the EPC space. A good supplier tie-up can ensure you get the quality goods. The technology is so myriad and hidden in specifications. PV manufacturers can easily get away by supplying their C grade panels for lower prices they will work fine for a few years, but longevity is questionable.

It is important to carefully evaluate the quality philosophy of the EPC contractor.

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Factor 5: Execution tie-ups

At the cost of repetition, EPC is a team effort. No single company has the complete in-house capability to do everything. Even if they do, it is not economical to do everything in-house, and you will be paying a premium to get the services from such a comprehensive contractor.

Ensure that the EPC contractor brings strengths of tie-ups or internal strengths in terms of: -- PV Panel supplier -- Inverter supplier -- Electrical contractor -- Evacuation contractor (different from electrical) -- Civil contractor including foundations -- Structural designer and contractor (different from civil)

Factor 6: Internal Team

How to choose an EPC contractor, page 10

An experienced team with excellent electrical engineering background and management background is a must in addition to a tie-up. No amount of external experience can replace a closer look at the project at hand.

Factor 7: Financial strength

Does the EPC contractor have the financial means to handle large projects worth a few million dollars? Or is it a technically strong company but new to large projects? This is an often ignored but a very strong evaluation point. Do you want the largest guys with financial muscle? Not necessarily. Your project value being a huge multiple of the small EPC contractor's financial position will mean a risk. The project value being a miniscule proportion of a large EPC contractor's financial position is also an equally big risk. Ideal is a contractor that has the right financial strength for the project.

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Factor 8: Commitment to India & to your project

Very important aspect. No amount of other qualification will help if the contractor does not give importance to your project. If the contractor has great resources but assigns the choicest of their resources to some other project, your project will be handled by the not-so-good resources. Given the nature of the solar power plant, where you are reaping returns over a very prolonged period, this will be a huge disadvantage.

Factor 9: Flexibility Again, committed contractors will probably be willing to listen and modify. The standards in this are yet to emerge so flexibility will ensure that the project is executed in the optimum way technically and economically. This is How to choose an EPC contractor, page 11 in some ways conflicting with the point on experience if the EPC contractor has experience, the customer should listen and agree, right? Not necessarily. There needs to be a fine balance between authority that comes with experience and flexibility that comes with commitment for the success of the customer.

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Checklist for choosing EPC contractor

Factors Factor 1: Type of player New independent Integrators/consultants EB & other ex-government employees New integrators with foreign tie-ups How to choose an EPC contractor, page 12 Panel manufacturers (Rare) Indian integrators with experience abroad (Rare) Integrators with Indian experience Factor 2: Experience Factor 3: Technology Tie-ups Factor 4: Supplier tie-ups Factor 5: Execution tie-ups Factor 6: Internal Team Factor 7: Financial strength Factor 8: Commitment to India & to your project Factor 9: Flexibility Tick () Appropriate Score

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Conclusion
Aspiration Energy 9REN is also a player in the EPC space. Hence this guide may be perceived as biased. We have tried to be as unbiased as possible.

There is a famous Kural saying in Tamil: Epporul Yaar Yaar vaai ketpinum, apporul meipporul kanbadhu arivu. The meaning (not literal): You can hear so many things from so many different people. Wisdom is in finding the truth and taking the essence of the same for use.

How to choose an EPC contractor, page 13

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About Aspiration Energy

Aspiration energy is promoted by co-founders of Aspire Systems, a successful, 500 people, profitable IT services company. Supported by the IIM Ahmedabad's Centre for Innovation Incubation and Entrepreneurship (CIIE) and Ministry of New and Renewable Energy (MNRE) under the Renewable Energy Search program, Aspiration Energy brings the services of design, sourcing, installation, commissioning and servicing for solar photovoltaic and solar thermal systems. Aspiration Energy also brings the expertise tie-up with a Spain based Integrator 9REN, who have more than 100 MW installations. We bring in good tie ups with Chennai based electrical consultants, architects, LEED consultants and structural engineers, in addition to project managers, to provide a well-rounded service to make economical solar installations a reality today.

How to choose an EPC contractor, page 14

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