Engineering, Procurement, Construction — EPC

In Indonesia's solar PV (PLTS) sector, EPC contracts are used mainly for systems above 100 kWp — the client receives a system that is already operating rather than managing separate subcontractors [IRENA, Renewable Power Generation Costs, 2023].

The EPC scope of work is divided into three sequential phases. Engineering covers the site survey, system design (panel layout, inverter sizing, roof or ground-mount structure design), and preparation of technical specifications. Procurement is the sourcing of major materials — modules, inverters, cables, protection systems, and Balance of System (BOS) components — including price negotiation and logistics to the site. Construction covers physical installation, commissioning, testing, and handover of an operational system.

The client pays a single contracting point; the EPC vendor bears internal coordination across disciplines. The payment structure is generally either lump-sum (a fixed total price, with volume risk on the vendor) or cost-plus (reimbursement of actual costs plus a fee, with risk on the client). In Indonesia's B2B market, lump-sum is more common because it gives certainty on capital expenditure (CAPEX) for the buyer [LPJK, Construction Contract Guidelines, 2020].

An important distinction: EPC is a scope-of-work model, not a type of legal entity. A contractor is the company that executes; EPC describes what is being done. A single contractor can take on a non-EPC project (e.g. construction only, while the client handles engineering themselves).

Unlike the BOO and PPA schemes — where the vendor retains ownership of, or sells electricity from, the asset — under an EPC contract the PLTS asset becomes the client's property directly after handover. The client bears long-term operating costs but has no obligation to make recurring payments to the vendor once the project is complete.

Indonesian PLTS Application Example

A textile factory in Bandung with a 3,000 m² roof signs a lump-sum EPC contract for a 500 kWp PLTS system. The EPC vendor completes engineering (2D/3D design, roof load calculations), procurement (600 Wp TOPCon modules, two units of string inverter at 250 kWp each), and construction including commissioning and a production test. After handover, the factory owns the asset outright; estimated electricity bill savings are ~Rp 600-700 million per year based on the I-3 medium-voltage industrial tariff of Rp 1,114.74/kWh [PLN, tariff adjustment Q1 2026].