The administrators of the collapsed RCR Tomlinson group of companies have moved to extract the contracting and engineering giant from the solar business that appears to have torpedoed the company’s finances.
McGrathNicol, appointed last month after the company failed to get more finance to cover a cash shortfall, say they are continuing to run all the RCR Group’s businesses, and seeking buyers, with the exception of solar.
- “(We have) commenced the wind down of solar operations,” the administrators said in a presentation to creditors on Monday.
It is believed that RCR is currently involved in nine solar projects across the country. Some are close to completion. Some, like the 30MW stage 2 extension of the Greenough River solar farm in W.A, had barely commenced.
RCR grabbed a major share of the large-scale solar contracting market after first entering the industry in 2016, but appears to have been undone by budget blowouts and connection delays, which left the company exposed to finding more cash, missing milestone payments and facing liquidated damages.
They are by no means the only contractor to have suffered the same fate, with Neoen reporting problems with its three solar farms in western NSW, and Carnegie Clean Energy making the same admission of its off-grid solar-battery hybrid business, where it lamented delays and blowouts for the huge losses it faced.
RCR’s problems first came to light with the $57 million over-run of costs from the $315 million project to build the Daydream and Hayman solar farms in Queensland. Some in the industry say the issues cited – problems with ground conditions and support structures – were not experienced in neighbouring projects, or that there had been greater allowance in the budget.
Solar projects across Australia have faced delays – in part because of strict new conditions from the Australian Energy Market Operator, in part due to delays from under-staffed network companies, the shortage of experienced modellers, and in some cases mistakes and wrong assumptions by the developers themselves.
The fallout from the RCR case is likely to be felt across the industry, both in pricing of contracts, costs of technology, and in the markets, where delays in project completion is affecting spot and futures contracts in wholesale markets and the specialised market in large-scale certificates.
RCR creditors have been told there are about $630 million in claims so far, and a detailed report will be due before Christmas, when more light might be shed on the solar business and its failings.
In the meantime, those project developers caught short by the RCR collapse will be looking to find new contractors, which could be an interesting challenge for some still trying to meet finance goals and off-take agreements. Labour firms had already pulled staff from many projects.
Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.