Neoen pockets significant damages for delays to Australia’s biggest solar project

French renewable energy developer says it has received significant “liquidated damages” in the latest half year arising from delays in the delivery of the country’s biggest solar project.

The 400MW (ac) Western Downs solar farm in Queensland is the biggest in Australia, although it may be shortly overtaken by the New England solar farm in northern NSW that is being built by Acen.

The Western Downs farm reached full commissioning only recently, and like many wind and solar projects in Australia suffered delays for a bunch of different reasons, and often relate to delays in equipment or connection and commissioning problems.

Neoen has previously said delays in module deliveries would likely mean that the Western Downs solar farm was not complete by late last year, as originally scheduled, but it made clear it was protected by liquidated damagess clauses.

Neoen says it likes to lock in clauses for liquidated damages in its EPC contracts, even though they tend to be more expensive, because it protects against losses. It has exercised similar damages claims at its smaller solar farms in western NSW, and at the Bulgana green energy hub in Victoria.

The Western Down EPC contractor is India-based Sterling and Wilson Renewables, which has cited several liquidated damages claims in its result result presentations, but has not identified which projects.

It is largely protected from such payouts by a funding agreement from its new major shareholder, the Indian energy giant Reliance, unlike other EPC contractors that have fallen by the wayside under the weight of damages claims.

Neoen did not quantify the extent of the damages claims for the delays at Western Downs, but they appear to have been significant.

It was one of the main reasons – along with the start of production at the facility – for a 29 per cent lift in adjusted EBITDA from its solar division to €114.8 million in the first half, and lifted its profit margins to 99.9 per cent.

Liquidated damages were also paid for the delayed commissioning of power plants in France and Ireland.

The output of the Western Downs solar farm is contracted mostly to the state-owned CleanCo, and is part of a green energy hub which will also feature a big battery project.

Neoen said earlier this week that the battery component would be expanded from the original plan of 200MW and two hours storage (400MWh), to a new size of 270MW and 540MWh).

That will make it easily the biggest battery in Queensland, and the largest battery in Australia to be directly located next to a solar facility. That battery component is being built by UGL, using Tesla Megapack technology.