OUT-LAW ANALYSIS 5 min. read
The market is entering a more complex phase. iStock/THEGIFT777
23 Jul 2026, 3:20 pm
The evolution of South Africa’s renewable energy market is creating opportunity for developers, contractors and investors, but also increases the risk of claims and disputes.
The market is entering a more complex phase as the country’s established public procurement programmes continue to bring utility-scale wind and solar projects to market. Private offtake projects are increasingly being developed outside of traditional procurement routes.
As complexity rises, it is vital for projects to manage risks appropriately. It is important for risks to be identified early and for both developers and contractors to take practical steps to reduce the risk of claims and disputes.
Renewables projects are exposed to many of the familiar risks seen on large construction and infrastructure projects, including delay, scope change, incomplete design and failures in contract administration. What makes the sector distinctive is the extent to which those risks are amplified by the project structure.
A typical independent power project involves a developer or seller, an offtaker, an engineering, procurement and construction (EPC) contractor or split supply and balance-of-plant structure, lenders and their technical advisers, Eskom, in the case of South Africa, or another network operator, and an operations and maintenance (O&M) contractor. Rights and obligations flow up and down that chain. If one interface fails, the consequences may be felt across the project.
That is particularly relevant for international participants entering the South African market, who may be familiar with renewable energy projects elsewhere but less familiar with the local procurement, grid, community, labour, logistics and contract administration environment. The same is true for domestic participants moving from smaller private projects into larger, lender-backed or programme-driven structures.
Utility interface issues remain one of the most common and difficult sources of claims on South African renewables projects. They often arise where additional technical requirements are introduced, approvals are delayed, connection works change, or the network operator is unable to perform its own works in the required timeframe
A grid-related delay may trigger relief under the power purchase agreement and under the EPC contract, but the relief will not always be identical. There may be a pass-through mechanism, strict notice requirements, proof of critical delay and mitigation obligations to satisfy. If those steps are not followed, a legitimate claim can lose its value.
The addition of a battery energy storage system (BESS) increases this interface risk. Storage projects introduce new technical interfaces, performance assumptions, grid and control system requirements, and commissioning dependencies. Where BESS is added to an existing generation project, the parties need to be clear on how the storage asset interacts with the original project, who is responsible for integration, and how delay or performance issues will be assessed.
Community unrest, local employment issues and access constraints can delay works for days, weeks or months. These issues are not unique to renewables projects, but they are often built in areas where local economic expectations are high and where several projects may be competing for the same local resources and community support
Parties often look first to force majeure. Whether that is available depends on the wording of the contract and the facts. Some contracts include specific concepts of community unrest or disruption, often subject to compliance with a disruption mitigation plan. Others may exclude labour issues unless they are part of wider industry action. Even where force majeure is available, it may provide time relief only, leaving cost consequences where they fall
That makes early planning important. Community liaison, stakeholder mapping, realistic local participation strategies and clear escalation routes should not be treated as peripheral project administration. They are part of claims avoidance.
The pressure to achieve commercial operation under a power purchase agreement (PPA) does not always align neatly with the requirements for taking-over or completion under the EPC contract. A plant may be capable of exporting power, but still require manuals, training, documentation, punch list works or further testing before the EPC completion regime is satisfied.
Small drafting changes can have large consequences. Removing a grace period between commercial operation and taking-over, for example, may expose a contractor to delay damages even though the project has achieved a key revenue-generating milestone. Developers and contractors should therefore consider completion regimes as a whole, rather than focusing only on the headline commercial operation date.
Performance and defects issues can also become high-value disputes because they affect long-term revenue. Solar, wind and storage assets are built around assumptions on availability, output, degradation and maintenance. If inverters fail, modules crack, or a storage system does not perform as expected, the issue is rarely confined to a simple defects claim. It can affect warranties, O&M obligations, lender reporting and project valuation.
Many avoidable disputes start with poor contract administration.
Discipline is needed around the day-to-day commercial mechanics of the project. Payment certification should be supported by the evidence the contract requires, scope changes should be captured through valid instructions rather than informal agreement, contractual notices should be served within the specified timescales with the requisite formality, and supply chain or logistics issues should be recorded while they are still capable of being managed. Those points can appear administrative at the time, but they often become central to whether a party can prove entitlement later.
On renewables projects, this is particularly important because claims often need to be passed through from one contract to another. A contractor may need to provide information to the developer in time for the developer to comply with an upstream PPA or grid agreement. If the contractor is late, or the information is incomplete, the developer may lose its own entitlement. Equally, if the developer does not diligently pursue the upstream claim, the contractor may argue that its downstream entitlement has been prejudiced.
The practical lesson is that the contract should be treated as a live project management tool, not a document left in a drawer after financial close. Project teams need to understand notice periods, approval requirements, claims procedures and programme obligations, as well as the role of third-party certifiers or lenders’ technical advisers.
The first step is clear drafting and risk allocation. It should be clear who carries each material risk, to what extent, and whether time, cost, or both, relief follows. Grid interface risk, community disruption risk, change in law risk and delay caused by third parties are obvious examples. The technical schedules should also be checked against the contract conditions so that commercial risk allocation is not undermined by inconsistent technical wording.
The second step is realistic early planning. Developers and contractors should engage early with the network operator, lenders’ technical advisers, O&M teams and key suppliers. Baseline programmes should reflect the inputs most likely to affect delivery, including approvals, grid works, access constraints and commissioning activities. If those matters are not built into the programme at the outset, it becomes difficult to prove delay later.
The third step is disciplined contract management. Notices should be served promptly and should identify the contractual basis of the claim, the event relied on, the relief sought and the supporting facts. Programmes should be updated contemporaneously, and progress reports should record what is actually delaying the works, what mitigation is being taken and what decisions are needed.
The fourth step is proper record keeping. Good records are contemporaneous, reliable, project-specific and easy to retrieve. They should include the documents that prove what happened and why, such as programmes, progress reports, correspondence, meeting minutes, site diaries and testing records. Quality matters more than volume. A large document repository is of limited use if the project team cannot find the evidence needed to support or defend a claim.
The fifth step is communication. Senior-level escalation channels should be established before problems arise. Tiered dispute procedures, early warning mechanisms, independent expert processes and amicable settlement meetings only work if parties use them constructively and in good faith.
Early commercial engagement will not resolve every issue, but it can prevent a manageable claim becoming a project-wide dispute.
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