The surge in investment and construction of new energy projects, such as wind electricity and photovoltaics, in line with the “dual carbon” initiative, has sparked a wave of legal compliance issues and disputes. These industries, primarily focused on electricity generation, have encountered challenges ranging from project quality to delays in construction and grid connection.
Disputes over electricity generation losses have become prevalent in recent years, attributed to factors like quality concerns and project duration. Utilizing the Engineering, Procurement, and Construction (EPC) model as a framework, this article explores practical issues from both the project owner and general contractor’s perspectives.
Lost Potential Profits: Project owners, also referred to as developers, often seek compensation for electricity generation losses from general contractors. Such claims hinge on the assertion that the project owner has suffered anticipated benefits due to the general contractor’s contractual breaches. However, these claims are subject to limitations, considering foreseeability and mitigation of damages rules.
Losses Caused by Quality Issues: Quality issues, stemming from equipment and engineering aspects, plague new energy projects. Problems related to equipment quality, installation techniques, and operational errors can lead to lower electricity generation levels. Establishing causality becomes crucial, typically addressed through expert opinions or documentation such as maintenance reports.
Losses Caused by Delayed Completion: Delays in construction and grid connection not only impact electricity generation but also jeopardize government subsidies. Courts may differentiate between delays in obtaining and inability to obtain, affecting the interpretation of the owner’s losses.
Determining Lost Electricity Volume: Calculating lost electricity volume involves contrasting actual generation with anticipated levels based on contractual agreements or professional assessments.
Responding to Loss Claims: General contractors may dispute claims by challenging the validity of the EPC contract, asserting lack of causation, or attributing losses to external factors. Courts may apportion responsibility between the owner and contractor based on the circumstances.
Claiming Actual Losses: General contractors, having compensated owners for electricity generation losses, may seek reimbursement from downstream companies. However, courts may scrutinize the fairness of such compensation, particularly to prevent collusion at the expense of third parties.
Navigating these legal complexities demands meticulous assessment and strategic responses from both project owners and general contractors in the rapidly evolving landscape of new energy projects.