As Australia accelerates its energy transition, procurement models are evolving to better manage risk, speed up delivery and drive value. One approach gaining traction is split contracting: separating major project packages (for example, turbine or module supply, balance-of-plant works, grid connection, and operations) into discrete contracts rather than awarding a single turnkey engineering, procurement and construction (EPC) contract. This model is increasingly attractive across utility-scale solar, onshore wind and emerging storage projects, particularly where supply chains are tight and grid connection pathways are complex. At its core, split contracting enables sponsors to align each scope with the specialist party best placed to manage its particular risks, optimise pricing and secure critical equipment early.
What’s driving adoption
Several structural dynamics in the Australian market favour split contracting. Grid connection processes continue to be intricate and protracted, creating value in appointing specialist connection advisors and discrete delivery partners for network-facing works. Global supply constraints and price volatility for key equipment, from inverters to transformers, make early, direct original equipment manufacturer (OEM) engagement a hedge against lead-time risk and pass-through margins. Meanwhile, the maturing domestic contractor market supports competition across civil and electrical balance-of-plant packages, allowing sponsors to tailor scope to site-specific conditions and labour availability. Lenders, too, have grown more comfortable with bankable risk allocation under well-structured multi-contract frameworks, particularly where robust interface management sits at the centre of the delivery strategy. Traditionally, this was one of the key factors which hindered the use of this procurement approach.
The benefits of a split approach
The principal advantages fall into five categories.
Pricing transparency and value. Separating scope across several specialist contractors often reduces EPC ‘margin stacking’ and allows for competitive tension across packages, improving price certainty and enabling value engineering at the right level.
Programme and supply-chain resilience. Direct procurement of long-lead equipment de-risks schedules, while parallelising works across packages can result in shorter critical paths when supported by strong interface planning.
Risk allocation and control. Sponsors retain greater control over design, technology selection and performance requirements, aligning warranties and performance guarantees directly with OEMs and specialist contractors rather than relying solely on back-to-back EPC protections.
Flexibility. Split contracting allows early works to proceed under various enabling packages while design finalisation and grid studies continue, preserving optionality as market, network or policy settings evolve.
Bankability and performance. With careful structuring, clear scopes of work (and battery limits), interface matrices, single points of responsibility for key performance metrics, coordinated liquidated damages and integrated commissioning plans, multi-contract models can meet lender expectations while delivering superior outcomes compared to a turnkey EPC model.
The risks of a split approach
The principal risks with split contracting centre around:
Recovering liability. Sponsors do not have the luxury of only needing to pursue a single party where things go wrong (unlike in EPC contracting models). Clear scopes of work (and battery limits), interface matrices, single points of responsibility for key performance metrics and integrated commissioning plans are critical to ensuring Sponsors are not embroiled in complex disputes between multiple parties each looking to point the finger at each other.
Complexity of disputes. Whenever issues need to be resolved via formal dispute processes, they can often involve multiple parties and can be more complex, taking longer to resolve and therefore being costlier than in comparison with an EPC contracting model.
Interface risk. Successfully ensuring scopes of work and interface risks are managed appropriately (as explored above) can require more internal technical and project management expertise than that which may be required under an EPC model. Sponsors need to ensure they have the right expertise internally (or engage consultants with the right experience and capability) to manage these technical risks.
Administrative burden. Sponsors will need to manage more contracts and coordinate change between a number separate contract packages that may impact each other over the life of a project. This will typically require increased project management and contract administration resources, when compared with an EPC contract model.
Making it work in practice
Successful split contracting hinges on disciplined integration.
Sponsors should invest early in a robust contracting architecture: a coherent suite of contracts with consistent definitions and mechanisms; aligned technical standards, battery limits and scopes of work; and clear interface schedules and matrices that allocate design responsibility, access rights and coordinate commissioning and testing regimes.
A capable and experienced project management and engineering team are essential to coordinate design, manage interfaces, administer testing and enforce performance guarantees. This team needs to be supported by an integrated programmes, common document control systems and procedures and a unified safety and quality framework across all packages.
Performance risk should be anchored through coordinated liquidated damages, direct OEM-backed warranties and a clearly articulated single point (or structured hierarchy) of responsibility for key performance metrics.
As the Australian renewable energy market scales, split contracting can offer a pragmatic route to price certainty, faster completion and more efficient risk allocation when planned and managed appropriately. For sponsors prepared to invest in front-end planning and integration, it can unlock competitive advantages while preserving bankability in a market where cost, speed, flexibility and control matter most.