Avoid Liquidated Damages - Understanding Contract Risks with ASTM Performance Tests
Too often, consultants think that the capacity testing process begins after energization. In fact, it begins before the contract is signed.
In our experience, almost all of the EPC contracts modify or limit the standardized capacity testing process.
One important type of contract clause is related to the testing period. Some contracts dictate how soon a passing test must occur. Of course, everyone wants the system to pass quickly, but in certain cases this exposes the EPC to risk outside of their control. The biggest of these risks is weather. This can take many forms. During bad weather, low irradiance, clouds, and snow may cause noise in the data. During periods of great weather, excessively good production can actually be bad for data - when inverters are clipping, all data points must be thrown out. If the weather is simply different than it normally is during that time of year, it may be impossible to generate sufficient data points within the baseline reference range. Any of these conditions can mean that a test simply isn’t possible within a particular range.
The contract may also dictate the number of retests that may be performed. So while Instant Capacity system allows you to run as many tests as you want, the contract may limit you to a certain number. Our smart filter system can help minimize the impact of this issue, but ultimately, there are risks that can’t be controlled. It’s understandable that asset owners are concerned about the possibility of what’s known as “P Hacking” (performing a test over and over until you get the desired result).
For all of these reasons, we strongly recommend involving us during the contracting phase, rather than bringing us in us after critical decisions are already set in stone. We regularly provide clients with technical review of capacity testing language, as well as other technical risk items like design standards, commissioning standards, and more in EPC contracts.
