The words “independent engineer” get attached to three different jobs. Some mean the owner’s adviser. Some mean the bank’s inspector. Some mean whoever checks the EPC contractor’s drawings. All three jobs are real, but each has a different client, a different sign-off and a different duty when something goes wrong.
Mixing them up has a practical cost. An owner who expects the lender’s engineer to protect plant performance will find that the engineer reports to the lender. A lender who accepts a review from the firm that drew the plant has bought a second opinion from the first author. This guide separates the three roles and shows where one firm must not hold two of them. It is part of our solar engineering hub.
Quick answer. The owner’s engineer works for the plant owner and reviews the EPC contractor’s design, site work and tests. The lender’s engineer is chosen by the lender and certifies progress before loan drawdowns. The EPC designer works for the contractor and draws the plant. That makes three clients and three sets of sign-offs. One firm should not hold two of these roles on the same project.
What is the difference between an owner’s engineer, a lender’s engineer and an EPC designer?
The matrix below sets the three roles side by side. The lender’s engineer column follows the terms IREDA published in its notice of 9 December 2022. Other lenders set their own terms. The designer and owner’s engineer columns describe common contract practice, and your own contracts decide the detail.
| EPC designer | Owner’s engineer (OE) | Lender’s engineer (LIE in India, IE in the US) | |
|---|---|---|---|
| Appointed by | The EPC contractor | The plant owner, under its own contract | The lender. IREDA states it appoints at its sole discretion from its panel, project by project |
| Paid by | The EPC contractor, out of the contract price the owner pays | The plant owner | Chosen by the lender, but the borrower carries the cost. IREDA pays the fee and debits the borrower’s account |
| Represents | The contractor’s duty to deliver the contract at an agreed cost | The owner’s long-term performance and cost interest | The lender’s interest in repayment and in releasing loan money against real progress |
| Reports to | The EPC project manager | The owner | The lender |
| Reviews | Nothing independent. It produces the design | Specification, EPC design, vendor drawings, site work, tests and handover, as set by the appointment contract | Yield, site, cost, design, contractor capability, land, approvals, evacuation and contracts, then construction progress, drawdown requests and completion |
| Signs or issues | Drawings issued for construction, calculations, as-built drawings | Comment registers, inspection and test witness records, handover verification | Drawdown certificates, a completion certificate, due diligence and monitoring reports |
| Independence test | None. It works for the party being reviewed | Independent of the EPC contractor, its designer and its suppliers on the same project | Independent of the borrower and the contractors, as the lender defines it |
Three points come out of the matrix.
First, “independent” in “independent engineer” means independent of the borrower and the contractors. It does not mean neutral between the lender and the borrower. The lender’s engineer works for the lender.
Second, the EPC designer is not a reviewer at all. A designer who signs its own drawings has not checked them in the sense a lender or owner means.
Third, the owner’s engineer is the only one of the three whose client carries the plant’s long-term performance risk. For the stage-by-stage scope of that role, read our guide to the owner’s engineer for solar projects. This guide does not repeat it.
Watch the vocabulary as well. SolarPACES summarised tips from the US Department of Energy Loan Programs Office in December 2023. The office contracts an independent engineering firm, paid for by the applicant. That firm produces what the office calls an “Owner’s Engineer Report”. The title says owner, yet the lender engages the firm. Check who appoints the firm and who receives the report, not the title on the cover.
How do Indian lenders appoint a lender’s independent engineer?
IREDA draws from a panel, and its terms show the mechanics. IREDA is the central government renewable energy lender. Its notice inviting bids dated 9 December 2022 invites firms to join a panel of Lender’s Independent Engineers for IREDA-funded projects. It covers wind, ground-mounted solar, large rooftop solar and other technologies. Each technology is split by size. For ground-mounted solar the bands are up to 10 MW, above 10 MW up to 50 MW, and above 50 MW. A 20 MW plant falls in the middle band.
The firm-level entry tests rise with size. The figures below are from the notice’s eligibility tables for the three solar size bands.
| Entry test, per the 2022 notice | Small (up to 10 MW) | Medium (above 10 MW up to 50 MW) | Large (above 50 MW) |
|---|---|---|---|
| Average annual turnover, FY 2018-19 to FY 2020-21 | At least ₹25 lakh | At least ₹1 crore | At least ₹5 crore |
| Net worth in each of those years | At least ₹10 lakh | At least ₹50 lakh | At least ₹1 crore |
| Full-time technical staff (engineering degree, 2 years in renewables) | 5 | 10 | 15 |
| Past assignments as LIE, EPC or project consultant | 5, each above 1 MW | 5, each above 5 MW | 5, each above 20 MW |
All bidders also had to show a net profit in FY 2020-21, three years of incorporation in India and a GST registration. For ground-mounted solar there is a technology test on top. A bidder needs at least two solar assignments above 5 MW each in the past three financial years. It also needs one senior solar expert on its rolls with at least five years of experience. That expert must have worked on three solar projects as consultant, construction monitor or lender’s engineer. A junior expert with three years of experience and two such projects is required as well.
Four rules on how the panel works matter more to a developer than the entry tests.
- A panel place is not an appointment. The notice says a place on the panel gives no right to be appointed. IREDA appoints from the panel for a particular project at its own discretion.
- Work rotates. The notice describes awards on a rotational basis. Firms are approached in order of their technical marks within the category, and a firm is approached again once the cycle completes.
- The team is named and fixed. A firm sends the names of its senior and junior expert within 10 working days of the award. Changes need IREDA’s approval, and sub-contracting the work is not allowed.
- A conflict declaration comes with the appointment. The firm certifies that no conflict of interest exists with any other party on the nature of the work. It also commits not to take any assignment during the engagement that may affect the interest of the client.
One detail in the entry tests deserves attention. The experience count accepts assignments as “LIE, EPC or project consultant”. So a firm on a lender’s panel can have EPC-side or consultant-side history. That is normal, and it is the reason the conflict declaration is project specific.
IREDA also publishes a roster of the firms it admitted, as a separate document. This guide does not reproduce it, because panels and ranks change. Ask IREDA or your loan officer for the current copy and the current rate card.
One correction saves time. IREDA issued a second LIE notice on 23 July 2025. We opened it. It invites firms for green hydrogen and electrolyser projects only and does not cover solar. The solar, wind and hybrid terms of reference sit in the 2022 notice.
Other lenders run their own arrangements. Our guides to lender acceptance in India and lender due-diligence engineering show how the review differs by lender. Ask yours which firm it will use before you name an owner’s engineer.
What does a lender’s engineer review and sign on a solar project?
The 2022 notice sets the scope for wind, solar and hybrid projects in four pieces of work, all reported to IREDA.
- A one-time technical due diligence. It covers a review of the developer’s yield study plus an independent yield assessment. It also covers site and soil, project cost, design and planning, contractor capability, schedule, land, approvals and evacuation against the power purchase agreement. The engineer also reviews the main contracts, including liquidated damages, liability caps and change order procedures.
- Quarterly construction monitoring. The engineer reviews progress, delivery schedules and each drawdown request against progress and invoicing. It issues drawdown certificates in the format the loan agreement sets.
- Remarks on performance tests. The engineer comments on site performance and efficiency tests and certifies compliance with the contract’s performance commitments.
- Completion and early operation. The engineer signs a project completion certificate. After three months of operation it reports on generation data and performance tests.
The notice also fixes the working pattern. The firm makes at least one site visit in each quarter. It files a site monitoring report within 15 days of the visit. It fields one senior and one junior expert.
Read that list as an owner would. The engineer certifies for the lender, on a quarterly cycle. The weeks between visits are not covered. Daily workmanship, equipment substitutions and the punch list sit with the owner’s side. That gap is the practical case for an owner’s engineer.
To see what makes a package bankable, read what an independent engineer looks for in a solar DPR. For the paper that goes into the loan file, see solar project loan documents in India.
What does an independent engineer report do in US project finance and tax equity?
The US role is the same lender-side role under a different name. The private scope documents that tax equity investors use are not public, so the sources below show the role from three public angles.
A filed credit agreement. Sunrun’s Luna portfolio credit agreement is dated 20 April 2021 and conformed through its ninth amendment. It is filed as Exhibit 10.26 to Sunrun’s 2024 annual report. It covers residential solar, not a 20 MW plant, but it shows how lenders write the role down.
- It defines the independent engineer as a qualified firm with substantial residential solar experience. The firm must not be an affiliate of the borrower or the sponsor, and the super-majority lenders must approve it.
- It defines the independent engineering report as a report on solar assets owned by a subsidiary or included in a tax equity fund.
- Receiving that report in a form satisfactory to the agent and each lender is a condition to the first funding.
- The borrower must deliver a refreshed report at least once per calendar year.
- New equipment suppliers can be approved only where the report opines favourably on their equipment, and eligible systems must sit in states the report covers.
An underwriter’s view. Norton Rose Fulbright published a roundtable in June 2020. A US Bank managing director said that, for energy storage, underwriting “comes down to an independent engineer review and technology review and the strength of the warranty”. That remark was about storage, but it shows where a US financier puts its weight.
A vendor’s description. DNV describes its solar due diligence service this way. Financial institutions intending to invest in or acquire a solar project frequently require an independent third party. DNV says the review targets technical aspects such as energy production estimates, equipment and technology. It adds that the review can include site visits, manufacturer audits and detailed equipment inspections. That is DNV’s own description, not a standard.
DNV also sells a separate owner’s engineering service for solar, aimed at farm owners and operators. A firm can sell both services. The conflict rules below say it should not hold both on one project.
Who commissions the US report varies by deal. Confirm it in the financing documents, and do not assume your tax equity investor will accept a report you commissioned.
Why should one firm not hold two roles on the same project?
Because each role answers to a different client, and some clients want opposite things. The table lists the four combinations that come up.
| One firm holds | The conflict | How to read it |
|---|---|---|
| EPC designer and owner’s engineer | The reviewer checks its own drawings | Internal checking. Useful, but not owner-side review |
| EPC designer and lender’s engineer | The lender’s reviewer certifies the design it produced | Not independent. It fails the plain meaning of the IREDA conflict declaration |
| Owner’s engineer and lender’s engineer | One duty is to advocate for the owner, the other is to give the lender an unbiased view of the same contracts, costs and schedule | Two clients who can disagree on every drawdown |
| Owner’s engineer and EPC contractor, supplier or subcontractor | The reviewer is paid by, or competes with, the party it reviews | A weak owner’s engineer |
The second row matters in India because of how the lender’s engineer is paid. The lender chooses the firm and the borrower bears the cost. The fee flows through the borrower’s account, yet the duty runs to the lender. That is a normal arrangement, and it works only because the engineer’s independence is a written commitment. IREDA’s declaration is one example. The Sunrun agreement uses another test: no affiliation with the borrower or the sponsor.
The third row is the one developers overlook. The lender’s engineer reviews liquidated damages, liability caps and change order terms in the EPC contract. An owner’s engineer may have helped write those terms. Reviewing your own work for a second client does not pass the declaration test.
Two practical limits keep this fair to firms. The rule is about one project. A firm can hold different roles on different projects, because the clients and the facts differ. And a firm can decline a role when it sees a conflict. Ask each firm for a written statement of its role on your project. Lenders may impose stricter rules than any shown here.
What does a 20 MW project look like with all three roles?
The timeline below is illustrative. It assumes a 20 MW AC ground-mounted plant in India and a term loan from a public lender that uses IREDA-style terms. It also assumes a lump-sum EPC contract and eleven months from EPC award to completion. The month numbers are assumptions, not data from any project.
| Month | Owner’s engineer | Lender’s engineer | EPC designer | What changes hands |
|---|---|---|---|---|
| 0 to 1 | Writes the owner’s requirements and technical specification, then compares bids | Not yet appointed | Bidders prepare bid-stage designs | Specification, bid comparison |
| 2 | Reviews technical schedule and test clauses before signing | Appointed by the lender after the loan application. Starts due diligence on yield, site, cost and contracts | Starts detailed design after award | EPC contract, due diligence request list |
| 3 | Reviews the design for construction and keeps a comment register | Delivers the due diligence report. Reviews design and equipment selection | Issues drawings for construction and answers comments | Comment registers, due diligence report |
| 4 | Checks progress against the owner’s milestone before the EPC payment | Confirms conditions to first drawdown and issues the drawdown certificate | Handles site queries and drawing revisions | Drawdown certificate, owner’s payment certificate |
| 5 to 10 | Inspects at hold points and keeps a non-conformance register | Visits at least once a quarter and reports within 15 days. Reviews each drawdown request | Marks up as-built changes | Inspection reports, quarterly monitoring reports |
| 11 | Witnesses commissioning and the performance test | Comments on the performance tests and signs the completion certificate | Issues the as-built set | Test records, completion certificate |
| 14 | Closes the punch list and the warranty and spares register | Reports on generation data and performance tests after three months of operation | Issues final as-built drawings | Handover file, operation report |
Three things stand out.
Month 3 puts two reviewers on one drawing set. The EPC designer answers two sets of comments from two clients. It helps if the owner’s engineer clears its comments first, so the lender’s engineer reviews a stable set. That is our practical suggestion, not a rule from the notice.
The lender’s engineer is absent for most of the build. At least one visit a quarter means roughly four visits across eleven months. IREDA’s 2022 rate card covers this size band, ground-mounted solar above 10 MW up to 50 MW. It set each quarterly visit at a lump sum of ₹75,000 plus taxes. The borrower bore travel. Four visits come to about ₹3 lakh before taxes and travel. IREDA fixed those rates for FY 2022-23 to FY 2024-25. Ask for current terms and do not budget from this number.
The owner’s engineer is the only party present from tender to handover. The lender’s engineer appears at financing milestones. The designer is paid to finish the design. That continuity is the owner’s reason to hire.
How do you set up the three roles on your project?
Use this order. It costs little and prevents most of the overlap problems above.
- Ask the lender which engineer it will appoint, before you name yours. The lender decides, and a clash found later is expensive.
- Write a one-page role letter for each firm. State the client, the scope, who receives the reports and what each firm signs.
- Get a conflict declaration from each firm for this project. IREDA asks its panel firms for one. Ask for the same from your owner’s engineer.
- Keep design responsibility with the EPC contractor. A review by either engineer does not make that engineer the designer of record. Say so in the contracts.
- Agree who witnesses which test. The owner’s engineer can witness for the owner. The lender’s engineer comments on the same test for the lender. Do not let one record serve both.
- Sequence the reviews. Let the owner’s engineer clear its comments before the lender’s engineer sees the drawings for construction.
- Keep a distribution list. Record which report went to which party, and when. Disputes later turn on who knew what.
For the contract clauses an owner’s engineer should read first, see our guide to LD, PI insurance and performance bonds. For how a drawing set matures between bid and construction, see bid-stage versus IFC-stage engineering.
Where does Heaven Designs fit?
Heaven Designs is not on any lender’s engineer panel and does not act as a lender’s or independent engineer. We are a solar design, engineering and consultancy firm, founded in 2020 in Surat (company-stated). Our design work for EPC companies sits in the EPC designer column of the matrix. A design firm, including ours, should not review its own design.
Our MW-scale project management consultancy page describes project management for utility-scale solar projects, from feasibility through commissioning. Its listed scope areas are planning and feasibility, design and engineering support, procurement and vendor management, construction management, QA/QC, commissioning and handover, and risk and compliance. The page does not describe a lender-side role. Whether a given engagement can be set up on your side of the contract is a scoping question, so raise it at the start.
FAQ
Is the independent engineer the same as the lender’s engineer?
Usually, yes. India uses “lender’s independent engineer” and the US usually says “independent engineer”. Both are chosen by or approved by the lender and report to it. Independent means independent of the borrower and the contractors.
Can the owner’s engineer sign a drawdown certificate?
No. Drawdown certificates come from the lender’s engineer, in the format the loan agreement sets. An owner’s engineer can verify progress before the owner pays the EPC contractor. It can also prepare your documents for the lender’s review.
Who pays the lender’s engineer?
Under IREDA’s 2022 terms, IREDA pays the fee and debits it to the borrower’s account. Travel and lodging are borne by the borrower directly. So the lender chooses, and the borrower bears the cost. Check your own loan agreement.
Does an owner’s engineer replace the lender’s engineer?
No. The lender sets its own engineer and its own terms. An owner’s engineer helps you meet the lender’s review, but it cannot issue the lender’s certificates.
Can one firm be the lender’s engineer on one project and an owner’s engineer on another?
Nothing in IREDA’s 2022 notice reviewed for this guide forbids it, because the roles apply to separate projects with separate clients. The conflict rule applies within one project. Lenders can set stricter terms, so ask yours.
Next step
Name the three roles on your project and write who appoints, who pays and who signs for each. If you are weighing MW-scale project management consultancy for a utility-scale plant, send us the project details and we will confirm what is in scope. We reply within 1 business day.