Solar crises intensify when RCR collapse is attributed to delays in connection



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Work stopped on another major solar power project hit by the collapse of engineering giant RCR Tomlinson when it emerged that delays in network connections and the impact on milestone payments played a significant role in the company's cash flow issues.

RCR – a leading contractor with about $ 2 billion in annual revenue – was placed on voluntary boarding last week after the company was unable to attract more funding to overcome its short-term funding problems, just a few months after rising $ 100 million to overcome big cost blowout on two Queensland solar farms.

RenewEconomy understands that the cash crisis was largely caused by failure to get milestone payments from project developers, in turn caused by delays in connecting to the network.

This is a problem that has affected the entire industry in one way or another – although some, like Neoen's Coleambally Solar, have managed to connect in record time.

Delays were attributed by the new Australian Energy Operator connection requirements, the lack of resources in some network companies, the lack of resources in the leading consultancies required for network modeling, and in some cases the lack of knowledge of the developers themselves who did not anticipate problems.

Workers were removed from five Queensland solar parks last week – Clermont, Emerald, Darling Downs, Collinsville and Haughton – after the collapse of RCR and the appointment of McGrathNicol as administrators.

Now comes another major RCR project, the $ 60 million expansion in 30MW of Australia's first large-scale solar plant in Greenough River, Western Australia, also stopped when funding issues were resolved.

The construction of this site only started last month and is expected to be completed by the middle of next year.

A spokesman for WA Energy Minister Ben Wyatt told The West Australian that the construction of the Greenough River expansion for state-owned company Synergy was suspended "subject to further decisions on the contract or board of directors."

Solar energy companies directly and indirectly affected by the collapse of RCR are struggling to understand the problems. One company, New Energy Solar, which recently bought the Manildra solar farm was built by RCR, said it was seeking to understand the implications for "a small number of items" yet to be completed.

McGrathNicol will hold meetings with creditors next Monday to provide an update on the situation. On Monday, it provided a schedule of events and meetings with RCR management in the weeks leading up to the collapse, including initial suspension of actions.

RCR announced in August a $ 57 million cost of the $ 315 million contract to build the Daydream and Hayman solar farms in Queensland, which forced the company to raise another $ 100 million to meet the depleted cash resources.

The role of solar contracts – which in all probability probably total more than $ 1 billion – was minimized by the time of the second suspension in mid-November. But now the issue is not so much the overhead as the connection delays that have been widespread in the industry.

This triggered the delay in milestone payments and RCR's cash position was so tight – despite its billions of civil engineering contracts in mines, railways and other construction projects – that it could not continue.

The timeline provided by McGrathNicol provides a reference – from a meeting with management on November 5 – to a discussion of major solar and rail projects and impact on cash flow forecasting. The company announced the resignation of its financial office two days later and a trading stop a week later. Ten days later, he was in administration.

Connection problems are not only impacting solar farms, solar and wind power developers warning about grid constraint problems in Victoria, which forced Total Eren to use expensive synchronous capacitors to ensure that its Kiamal solar project could be implemented .

In northern Queensland, uncertainty over network connections has caused a major capital partner in the Lakeland 106 MW wind farm project to be abandoned. Developer Windlab said that British investor InfraRed had given up, citing the "inability to price the risks associated with the network connection", including the risk of network loss and contingency.

Windlab, which is also building Kennedy's first solar wind project, says it is looking for alternative investors, but says the financial closure will be postponed until early 2019.

Infigen Energy also reported last week that its Cherry Creek wind farm and many other projects had been delayed by new connection standards, the requirement for various assessments, and the lack of experience in consulting firms to help companies in the process.

French renewable energy company Neoen reported in September that it made a $ 22 million claim against the construction company of three smaller solar parks in NSW due to construction and connection delays.

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