Another listed contracting firm has fallen victim to rising solar farm project costs, with Tempo Services shares suspended from trade and the two most senior executives quitting in the last few weeks.
The suspension of Tempo and the executive exodus follows problems at the 27MW Cohuna solar farm in Victoria, which only started construction two weeks ago. It is believed to be the first major solar project contract landed by Tempo since a shift into renewables just over a year ago.
Details of what went wrong with the $15 million solar contract have not been made available. But, by an extraordinary coincidence, Tempo has hired the former CEO of RCR Tomlinson, Paul Dalgleish, to help sort out its problems.
RCR, readers will remember, went bust and had to be liquidated following a cost blowout at two Queensland solar farms – known as Project Gretel – and delays and cost over-runs at many other projects.
Other contractors have also been hit by a wave of issue affecting solar farms, most of them related to the added costs, delays and complications of new connection requirements, but also because some appear to have cut their margins too far.
There is also talk in the industry that some recent power purchase agreements signed with solar farms will not be delivered because the owners fear they can no longer deliver at the prices quoted.
The 34MW (DC)/27MW (AC) Cohuna solar farm, located 25kms east of Kerang, is a $59 million project that is owned by Italy’s Enel Green Power, which also owns the Bungala solar projects in South Australia. Enel spokespeople did not respond to requests for comment.
Tempo has a $15.1 million contract for the Cohuna solar farm, which last year was one of six solar and wind projects to win the first reverse auction held by the Victoria government as part of its 40 per cent renewable energy target by 2025. It has a 15 year contract with the state government.
The Cohuna contract is a big one for a company that only had $41 million in revenue for all of last year. Only two weeks ago, the company awarded a $125,000 bonus to CEO Ian Lynass for landing the Cohuna contract, and another electrical services contract with Woolworths.
A day later CFO and company secretary Scott Macdonald resigned, and a day after that construction officially started at Cohuna. But within a week trading in the company’s shares was halted because of possible cost increases at a major project, and a week later had been suspended and Lynass resigned. Non-executive director Ian Widdicombe also left Tempo this month.
The appointment of RCR’s former boss Dalgleish came on the same day as the company’s AGM in Perth. Media were not allowed into the meeting, the chairman’s address was not published by the company, and new executive chairman Guido Belgiorno-Nettis (of the famous Transfield family) refused to talk to the media.
Belgiorno-Nettis has an 18.3 per cent stake in the company and former chairman Carmelo Bontempo, who holds a 17.3 per cent stake, told the West Australian he was alarmed about how Tempo was being managed.
Cohuna is predicted to enter into commercial operation by the end of 2019 and is expected to generate up to 77GWh each year, a very high capacity factor of 31 per cent. It will use around 87,000 “bifacial” modules, and will be connected to the local distribution grid through the Cohuna Zone Substation.