Further on...
I edited the plugin.py file to add the java path to the 'java' item in line 29 and the plugin works when spawning Sigil using Calibre's Open With plugin. So it would appear that the Open With plugin is not passing the path properly.
Code:
args = ['C:\\Program Files\\Java\\jre1.8.0_65\\bin\\java.exe', '-jar', epc_path, temp_dir, '-mode', 'exp']
Admittedly this is not an answer since I don't want to edit plugin.py every couple of weeks.