Sanjeev Gupta’s Simec Energy awarded damages
Sanjeev Gupta’s Simec Energy has won liquidated damages from a renewables developer after the collapse of a contractor.
Sanjeev Gupta’s Simec Energy has won liquidated damages from a renewables developer after the collapse of contractor RCR Tomlinson triggered delays in bringing power online from the facilities.
Simec, the Australian energy arm of Mr Gupta’s GFG Alliance, signed a power purchase agreement with German developer Wirsol Energy in June 2018 to purchase energy from its 110-megawatt Wemen solar farm near Victoria’s Mildura and its 90MW Clermont solar development in Queensland.
RCR Tomlinson had been building both solar farms for Wirsol and its subsequent collapse had a knock-on effect on the projects, which were originally due to be commissioned in the fourth quarter of 2018.
Simec was paid $3.36m in liquidated damages to reflect the lost output from the contract, according to a filing for financial 2019 by Liberty Greenpower, which houses the Simec PPA deals. About $468,379 is still to be paid, with the damages bill related to “a third-party energy provider not adhering to the contractually committed terms and conditions of the power purchase agreement”, Liberty said in an annual filing with the Australian Securities & Investments Commission.
GFG Alliance said it could not disclose further details due to the matters being subject to confidentiality obligations with third parties. Wirsol declined to comment. The federal government’s Clean Energy Finance Corporation lent $110m to the Wemen project and $97m to Clermont through debt facilities but on Thursday said it held no direct business relationship with RCR Tomlinson.
The Wemen solar farm has since had some of its output curtailed by the market operator, citing concerns over voltage issues potentially hitting the power grid.
New generation standards and system strength requirements have been put in place to ensure solar and wind maintain grid stability, with the Australian Energy Market Operator noting that following a trip on transmission lines the solar farms had shown “oscillatory behaviour”.
RCR’s rapid entry into solar farm construction over an 18-month period proved its undoing. The contractor won 15 solar contracts worth $1.5bn, which “introduced a significantly different risk profile” to the company’s finances with no noticeable changes to its governance or risk management processes, according to McGrathNicol.
RCR was involved in constructing more than a dozen solar farms with an estimated combined capacity of 1000MV at the time of its collapse.