Decmil shares slump after problems at huge Sunraysia solar project

The $277 million contract for the Sunraysia project – which has a long term power purchase agreement with AGL – was announced last October and construction at the facility, near Balranald in NSW, began earlier this year.

Decmil says that all plant, equipment and components necessary for the operation of the works are now complete, and delivered on time.

But it says the solar farm has so far failed to obtain R1 registration of the project from the Australian Energy Market Operator. The R1 registration must be submitted at least three months before commissioning and requires detailed data modelling.

“Decmil confirms it is continuing to support Sunraysia Solar with its R1 registration process, including the performance of additional testing and modelling,” the statement said.

But it says that Sunraysia Solar has refused to award to Decmil an extension of time and an associated adjustment to the contracted date for substantial completion. That means it faces delays in progress payments, including the completion milestone payment, until the issue is resolved.

“Notwithstanding this negative cash impact, Decmil retains sufficient cash reserves and working capital facilities,” it said.

The stock market reaction was probably prompted by the experience with RCR Tomlinson, the contracting giant that was ultimately sunk by cost overruns and delays at a number of its contracted solar projects.

Numerous other contractors have been hit by delays and damages claims from developers from lost revenue. The include Downer Group, Tempo Australia and Bouygues.

Other high profile projects have also suffered lengthy delays, with both the Kennedy Energy Hub – featuring a unique combination of wind, solar and battery storage in north Queensland, and the Bungala 2 solar project in South Australia, still not commissioned and running a year behind schedule.

John Laing has taken a $120 million hit to the value of various renewable energy projects as a result of changes and anticipated changes to so-called “marginal loss factors”, or congestion on the grid. It is thought that the write downs include Sunraysia.

John Laing said at the time it had put future investments on hold in Australia. It has been a leader in a consortium of investors that is seeking changes to the way the losses are calculated to provide greater clarity and reflect what is happening on the grid.

Maoneng, which holds a minority 10 per cent, said it did not wish to comment. The company, which has completed several smaller projects in and around the ACT, has also signed a contract with AGL to provide up to 200MW/400MWh of battery storage, with some of it to be located at Sunraysia.

The Sunraysia Solar website says the project was due for completion this month, but makes clear that the plant itself has not been energised or commissioned.