Listed contracting company Decmil says it has received a $6.1 million payment for the completion of the 200MW Sunraysia solar farm in New South Wales, but says deductions for “liquidates damages” claims are “wrongful.”
The dispute between Decmil and its owners – UK infrastructure fund John Laing and Australian-based Maoneng – has become one of the most visible disputes of the large scale renewables sector, principally because Decmil is listed and must release at least some details to shareholders.
It is, however, just scratching the surface of the depth of contract disputes in the industry, largely the result of delays in construction and commissioning, and cost increases – often matters beyond the control of the parties involved.
Liquidated damages is often used by owners and developers of wind and solar farms to recoup at least some of the revenue lost from delays to production. Some wind and solar farms have had to declare “force majeure” on their contracted output, although such details are never publicly released.
Sunraysia, near the town of Balranald in the south-west of the state, has been the scene of one of the most visible disputes, and subject to one of the longest delays.
Substantial completion of the project was finally acknowledged earlier this year, resulting in the $6.1 million payment to Decmil, but that is only a fraction of what it says is due.
In its newly released half yearly accounts, Decmil – which like other big contractors has withdrawn from the EPC contracting sector for large wind and solar farms – says substantial completion of the project was achieved on January 31 this year, with the operation and maintenance phase commencing.
It said the dispute concerns claims for extensions of time, variations, payment of liquidated damages, return and reinstatement of security and claims concerning alleged defects. “Decmil claims the deduction of liquidated damages, recourse to security and set-off is wrongful,” it says.
Arbitration has commenced although that process is currently “on-hold” with commercial discussions ongoing.
In turn, Decmil has filed claims against the inverter supplier Schneider.
“Insofar it is determined that the invertors supplied are defective (and therefore a concurrent delay) then Decmil will claim the loss suffered, as a result of loss attributable to Schneider, under the Supply Contract,” it notes.
Once again, it says that arbitration in this part of the dispute have been commenced and are underway, but concurrent commercial discussions are ongoing.
Separately, RES said it has been appointed by John Laing & Maoneng to provide asset management services for the Sunraysia solar farm
“Owners John Laing (now owned by KKR)( and Maoneng delivered the project into full operations earlier this month and RES’ Asset Management team will continue operations, supporting the asset owners in maximising value from the plant,” it said in a statement.
This will include managing the NEM market activities while providing operational communications with AEMO and plant monitoring.
“RES’s local plant performance specialists will explore further optimisation opportunities to improve the plant’s performance and maximise return on investment for the asset owners, drawing on extensive knowledge of the Australian market and a history of global experience,” it said,.
