Solar contractor files big claim against Shell over disputed cost overruns at Australian PV project

An India-based company that was once one of biggest contractors to the large scale solar industry in Australia has lodged a major claim against Shell Energy over disputed costs at an Australian solar farm.

The Australian subsidiary of Sterling and Wilson Renewable Energy is claiming damages of up to $28.03 million against Shell, along with interest and costs. The claim – relating to the Gangarri solar farm in Queensland – has been filed in the London Court of International Arbitration.

Sterling and Wilson once claimed to be the biggest EPC solar contractor in Australia, but has largely withdrawn from the Australian market. It was the main contractor for the Gangarri solar facility, which was completed in 2022, and the dispute appears to centre around the issue of harmonic filters.

In a filing to the Bombay Stock Exchange, Sterling and Wilson says the upper bound of its claim – $28.03 million plus $US1.64 million in damages – is based on what it calls Scenario A, where the full 120 MW of capacity with harmonic filters is recognised.

It is claiming $20.6 million plus $US1.6 million in damages in what it calls Scenario B, based on a reduced capacity of 95 MW without harmonic filters.

A spokesperson for Shell said in a later statement: “Shell Energy experienced significant and protracted issues on its Gangarri solar farm project. We intend to defend any claim brought under arbitration.” 

The use of harmonic filters has been a contentious one in Australia, and have often been required to minimise the impact of new projects on the grid, although their need has been questioned by some.

As one Indian analyst wrote, the global solar EPC landscape has been characterised by high-value contracts and razor-thin margins.

“Projects such as the Gangarri solar farm … highlight technical complexities like harmonic filter integration that frequently trigger commercial disputes between developers and EPC providers,” the Sahi Markets analyst wrote.

“Robust contractual clauses and active legal management are critical for global EPC contractors to defend their margins against cost overruns.”

The Australian large scale solar sector has been littered with various claims between developers and contractors, and some big names, including Downer, have fallen by the wayside as a result of them. Usually they only come to light when one party, a listed company, is forced to disclose it.

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