Notice to Proceed

What the release triggers

An EPC contract is signed before construction, often months before. The notice to proceed is the declaration by which the owner releases execution. Contractual construction time starts with it, the deadlines for milestones and completion run from it, and the first payment and the ordering of long-lead components are almost always tied to it.

It is therefore the dividing line between two risk positions. Before the NTP the owner carries development cost and can, under many contracts, still walk away against limited compensation. After it, supply obligations, payment schedules and liquidated damages are live.

The conditions that come first

A list of conditions precedent sits in front of the release. The usual ones: a permit no longer open to challenge, a binding grid connection confirmation, secured site control including access, evidence of financing, and the security the contractor has to post. The loan agreement mirrors this list, because first drawdown is tied to the same evidence.

That duplication is where the real coordination effort sits: the construction contract and the loan agreement have to demand the same conditions in the same order, or each side waits for the other.

What delay costs

A late NTP costs on three fronts. First, commissioning moves, which moves first revenue and, where tariffs step down over time, can worsen the tariff itself. Second, commitment fees accrue and supplier price validity lapses. Third, the permits and confirmations that had to exist for the release in the first place are burning through their own deadlines.

That is why the NTP date is in practice the most important date in the programme. It is the point at which every precondition has to hold simultaneously, and the only one where slippage cannot be recovered later.

The work before the release is reconciliation work, not construction work. The conditions in the construction contract, the drawdown conditions in the loan agreement, and the evidence a buyer requires at transfer are three lists that overlap heavily and differ in the details.

What works in practice is merging the three into one schedule early: one document, one owner and one date per item. It is unglamorous, and it is the difference between releasing on the planned day and releasing six weeks later because an easement was never registered.

Plan the date backwards from the intended commissioning date. Where tariffs step down on a fixed calendar, slipping past a window is a revenue question and not only a scheduling one.