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Solar EPC Contract Disputes in Turkey: Legal Rights, Claims and Remedies for Foreign Investors (2026)
Learn how foreign investors can resolve solar EPC contract disputes in Turkey. This 2026 legal guide explains delay claims, defective work, performance guarantees, liquidated damages, arbitration, litigation, contract termination, and compensation rights.
Turkey has become one of the fastest-growing renewable energy markets in the region, attracting significant investment in utility-scale solar farms, rooftop photovoltaic systems, industrial self-consumption projects, hybrid generation facilities, and energy storage-integrated projects.
Most solar investments are delivered through Engineering, Procurement and Construction (EPC) contracts. These agreements determine how the project will be designed, supplied, constructed, tested, commissioned, and handed over to the project owner.
For foreign investors, however, the EPC contract is often the single largest source of legal risk. Delays, defective workmanship, underperforming photovoltaic systems, grid connection failures, technical acceptance problems, warranty disputes, cost overruns, and contractor insolvency can significantly affect the profitability of a solar investment.
A well-drafted EPC agreement can reduce these risks, while a poorly negotiated contract may expose the investor to years of litigation and substantial financial losses.
This 2026 guide explains the most common EPC disputes in Turkey, the legal remedies available under Turkish law, and the practical steps foreign investors should take to protect their investments.
What Is a Solar EPC Contract?
A solar EPC contract is a comprehensive construction agreement under which the contractor undertakes responsibility for:
- Engineering and design
- Procurement of equipment
- Supply of photovoltaic components
- Construction
- Electrical installation
- Grid connection
- Testing
- Commissioning
- Technical acceptance
- Delivery of an operational solar facility
Unlike ordinary construction contracts, EPC agreements generally allocate substantial technical and commercial risks to the contractor.
Legal Framework Governing EPC Contracts
Solar EPC contracts are primarily governed by:
- Turkish Code of Obligations
- Turkish Commercial Code
- Electricity Market Law No. 6446
- Renewable Energy Law No. 5346
- Construction legislation
- Occupational Health and Safety Law
- Environmental legislation
- Relevant EMRA regulations
- Distribution company technical specifications
- Grid connection rules
- International commercial contract principles where applicable
If the contract contains an arbitration clause, procedural issues may also be governed by:
- Turkish International Arbitration Law
- International arbitration rules (ICC, LCIA, SIAC, ISTAC or others)
Typical EPC Contract Structure
A professionally drafted EPC contract usually includes:
- Scope of work
- Technical specifications
- Project schedule
- Milestones
- Contract price
- Payment mechanism
- Change order procedure
- Testing procedures
- Technical acceptance
- Performance guarantees
- Delay liquidated damages
- Performance liquidated damages
- Warranty obligations
- Defect liability period
- Insurance
- Force majeure
- Termination rights
- Dispute resolution
- Governing law
Most Common EPC Disputes
Foreign investors frequently encounter disputes involving:
- Project delays
- Cost overruns
- Defective engineering
- Incorrect system design
- Low electricity production
- Inferior equipment
- Grid connection failures
- Technical acceptance delays
- Failure to obtain permits
- Roof defects
- Structural failures
- Fire damage
- Warranty claims
- Performance guarantee disputes
- Payment disputes
- Contract termination
Delay in Project Completion
Construction delay is one of the most common EPC disputes.
Typical causes include:
- Late delivery of panels
- Customs delays
- Weather conditions
- Contractor mismanagement
- Labour shortages
- Design revisions
- Grid approval delays
- Employer variations
- Permit delays
- Financial difficulties
The first legal issue is determining responsibility for the delay.
Delay Liquidated Damages
Most EPC contracts provide predetermined compensation for late completion.
Delay liquidated damages usually:
- Accrue daily
- Are capped at a percentage of the contract price
- Continue until completion
- May trigger termination after reaching the contractual cap
The employer should verify whether the agreed amount constitutes the exclusive remedy or whether additional damages remain recoverable.
Performance Guarantee Disputes
The EPC contractor often guarantees:
- Installed capacity
- Performance ratio
- Annual electricity generation
- Availability
- Module degradation
- Inverter efficiency
Disputes commonly arise where:
- Actual production is below guaranteed levels
- The contractor disputes irradiation assumptions
- Equipment performs differently than expected
- Shading was underestimated
- Grid curtailment affects production
Independent technical experts are frequently required.
Defective Workmanship
Typical construction defects include:
- Poor cable installation
- Roof leakage
- Incorrect mounting systems
- Loose connections
- Earthing failures
- Fire protection deficiencies
- Corrosion
- Improper waterproofing
- Transformer defects
- Drainage problems
The employer may demand:
- Repair
- Replacement
- Price reduction
- Compensation
- Contract termination where legally justified
Equipment Defects
Equipment-related disputes may involve:
- Solar panels
- Inverters
- Transformers
- Mounting structures
- Monitoring systems
- Batteries
- Switchgear
- Protection equipment
The investor should determine whether responsibility lies with:
- Manufacturer
- EPC contractor
- Supplier
- Installer
- Designer
Underperforming Solar Plants
Many disputes concern electricity generation lower than expected.
Possible causes include:
- Incorrect design
- Wrong panel orientation
- Shading
- Poor installation
- Equipment defects
- Grid limitations
- Incorrect inverter sizing
- Dirty modules
- Faulty monitoring
The employer must distinguish between contractual performance guarantees and optimistic financial projections.
Technical Acceptance Problems
A project cannot normally begin lawful commercial operation until technical acceptance has been completed.
Acceptance may be delayed due to:
- Project deviations
- Missing documentation
- Protection failures
- Metering problems
- Incorrect equipment
- Capacity inconsistencies
- Grid non-compliance
Responsibility depends on the EPC allocation of obligations.
Grid Connection Disputes
Common disputes include:
- Failure to obtain connection approval
- Delayed energisation
- Incorrect connection point
- Capacity reductions
- Additional investment requirements
- Distribution company objections
The EPC contract should clearly allocate responsibility for obtaining and maintaining grid connection.
Variation Orders
During construction the employer may request:
- Capacity changes
- Equipment upgrades
- Design revisions
- Additional structures
- Storage integration
Each variation should be documented.
Failure to follow the contractual variation procedure often results in payment disputes.
Payment Disputes
Common disagreements include:
- Milestone payments
- Retention money
- Final payment
- Extra works
- VAT
- Currency adjustments
- Price escalation
- Bank guarantees
The contractor should never assume that verbal approval authorises additional work.
Advance Payment Guarantees
Foreign investors commonly require:
- Advance payment guarantees
- Performance bonds
- Warranty bonds
- Retention guarantees
Disputes often arise regarding:
- Calling the guarantee
- Wrongful demand
- Expiry dates
- Reduction after milestones
- Fraud allegations
Warranty Claims
Warranty periods frequently range between two and five years depending on the obligation.
Separate manufacturer warranties may extend much longer.
Claims commonly concern:
- Module failure
- Inverter malfunction
- Roof leakage
- Structural defects
- Cable deterioration
- Monitoring software
- Corrosion
- Water ingress
Hidden Defects
Some defects appear only after several years.
Examples include:
- Micro-cracks
- Moisture penetration
- Structural fatigue
- Corrosion
- Cable insulation failure
- Foundation movement
Turkish law may provide remedies even after completion where legal conditions are satisfied.
Contractor Insolvency
Financial distress may leave the project unfinished.
Employers should evaluate:
- Performance bond recovery
- Insurance claims
- Replacement contractor rights
- Step-in rights
- Equipment ownership
- Bankruptcy proceedings
Termination of the EPC Contract
Termination may arise because of:
- Serious delay
- Fundamental breach
- Persistent defects
- Insolvency
- Failure to perform
- Failure to achieve milestones
Termination procedures should strictly follow the contract.
Improper termination may expose the terminating party to significant damages.
Force Majeure
Force majeure clauses commonly address:
- Earthquakes
- Floods
- War
- Sanctions
- Government restrictions
- Pandemics
- Widespread supply-chain disruptions
The clause should clearly define:
- Notification requirements
- Extension of time
- Cost recovery
- Termination rights
Limitation of Liability
Many EPC contracts limit:
- Indirect damages
- Consequential losses
- Lost profits
- Aggregate liability
Foreign investors should carefully review whether these limitations undermine meaningful compensation.
Insurance Claims
Solar projects usually require:
- Construction all-risk insurance
- Third-party liability insurance
- Employer’s liability insurance
- Operational insurance
- Machinery breakdown insurance
The interaction between insurance recoveries and contractual damages should be addressed before litigation begins.
Expert Evidence
Most EPC disputes require technical evidence.
Experts commonly analyse:
- Construction quality
- Design
- Performance
- Electrical compliance
- Production
- Delays
- Structural issues
- Fire origin
Expert reports frequently determine the outcome of litigation.
Litigation Before Turkish Courts
Where arbitration has not been agreed, disputes are generally heard by Turkish Commercial Courts.
Possible claims include:
- Damages
- Contract termination
- Payment
- Defect remedies
- Specific performance
- Declaratory actions
Arbitration
International investors frequently prefer arbitration because it offers:
- Neutral forum
- Specialist arbitrators
- Confidentiality
- International enforceability
- Flexible procedure
Popular institutions include:
- ICC
- ISTAC
- LCIA
- SIAC
Interim Measures
The employer or contractor may seek urgent court measures to:
- Preserve evidence
- Prevent dissipation of assets
- Protect bank guarantees
- Secure equipment
- Prevent unlawful calls on guarantees
Compensation Claims
Recoverable damages may include:
- Repair costs
- Completion costs
- Additional contractor expenses
- Lost revenue
- Increased financing costs
- Replacement equipment
- Expert fees
- Delay losses
- Legal costs where recoverable
Practical Risk Management
Foreign investors should:
- Conduct technical due diligence.
- Carefully negotiate EPC clauses.
- Verify contractor experience.
- Require strong bank guarantees.
- Obtain comprehensive insurance.
- Monitor construction regularly.
- Document all delays.
- Preserve technical evidence.
- Obtain independent performance testing.
- Seek legal advice before terminating the contract.
Frequently Asked Questions
1. Can a foreign investor sue a Turkish EPC contractor?
Yes. Claims may generally be brought before Turkish courts or through arbitration, depending on the dispute resolution clause.
2. Can the employer terminate the EPC contract for delay?
Potentially yes, provided the contractual and legal termination requirements have been satisfied.
3. Are delay liquidated damages enforceable?
Generally yes, provided they comply with Turkish law and the contract.
4. Can the employer recover lost electricity production?
Possibly. Recovery depends on the contract, the cause of the underperformance, and the evidence establishing the loss.
5. Who is responsible for defective solar panels?
Responsibility depends on the contract and whether the defect originates from manufacturing, procurement, installation, or design.
6. Is arbitration common for international solar projects?
Yes. Many international EPC agreements use ICC, ISTAC, SIAC, or other institutional arbitration.
7. Can the employer call a performance bond?
Usually yes, if the contractual conditions for making a demand have been satisfied.
8. What evidence is most important in EPC disputes?
Construction records, correspondence, technical reports, commissioning documents, performance data, expert opinions, and contractual notices are usually decisive.
9. Can hidden defects be claimed after completion?
Yes. Turkish law may provide remedies for latent defects, subject to contractual provisions and statutory requirements.
10. What is the biggest legal mistake foreign investors make?
The most common mistake is signing a contractor-friendly EPC agreement without allocating responsibility for delays, performance guarantees, grid connection, technical acceptance, and defect liability.
Legal Support for Solar EPC Disputes in Turkey
Solar EPC disputes require legal expertise in construction law, commercial contracts, energy regulation, project finance, insurance, and dispute resolution.
Fırat Fesih Kaya Law Office advises foreign investors, renewable energy developers, EPC contractors, lenders, manufacturers, and international companies involved in solar projects throughout Turkey.
Our legal services include:
- EPC contract drafting and negotiation
- Delay and disruption claims
- Performance guarantee disputes
- Construction defect claims
- Technical acceptance disputes
- Grid connection disputes
- Bank guarantee disputes
- Arbitration and commercial litigation
- Expert evidence management
- Contract termination advice
- Settlement negotiations
- Enforcement of judgments and arbitral awards
For project-specific legal advice, early legal intervention can significantly reduce financial losses and improve the prospects of a successful resolution.
Phone: +90 312 434 22 22
Mobile Phone: +90 532 769 22 22
Email Address: info@firatfesihkaya.av.tr
Office Address: Mevlana Boulevard No:221, Yıldırım Tower No:148, 06520 Balgat, Çankaya, Ankara, Turkey
This article is provided for general informational purposes only and does not constitute legal advice. Every EPC dispute should be evaluated according to its specific contractual terms, technical circumstances, and applicable law.
