One of Australia’s leading solar contracting companies, Todae Solar, has gone into voluntary administration, a victim of the enormous competitive pressures and the impact on the commercial and industrial market from the Covid-19 pandemic.
Todae Solar appointed Matt Adams and Andrew Schwarz from AS Advisory as voluntary administrators on Thursday, July 2, after spending weeks battling to stay afloat.
CEO Danin Kahn says problems emerged soon after the Covid-19 pandemic forced the lockdown in Australia, with its finance facility abruptly withdrawn, and several key installation contracts suspended.
“It’s pretty unfortunate,” Kahn told RenewEconomy. “We had around 10MW less in sales that what we firmly expected to achieve in March and April. Shopping centres that were ready to proceed parked their project. They still haven’t gone ahead. And the mezzanine funding facility was withdrawn because the financier decided to get out of the market.
“It became very difficult in the current market to fill that gap,” Kahn said. “It would have been fine if the market had been as buoyant as it was, but with those two things working in tandem, it became very very tricky.”
The company is one of the most respected commercial EPC (contractors) in the country, with a 17- year track record, and a large portfolio of hundreds of megawatts of solar installations, including on Parliament House in Canberra, Novotel in Olympic Park, UNSW, and a number of other universities, shopping centres, aged care homes, farms, manufacturers, hotels, and dozens of businesses.
Its clients included major shopping centre owners such as Westfield, Mirvac, Stockland, along with leading corporate Coles and Telstra.
Just this week, Todae Solar was named as lead EPC contractor for two small solar farms totalling 7MW in South Australia, part of a portfolio that Flow Power is building to deliver the equivalent of 100 per cent of the City of Adelaide’s annual electricity needs.
Industry insiders say that the market is in a state of flux. While the headline figures shows near record installations – particularly in the smaller sub-100kW rooftop solar market – the larger commercial and industrial sector has been hit badly by the Covid-19 pandemic given the impact on retail, tourism, and the restrictions on aged care.
Kahn says that margins in the C&I market are very tight, and the problems experienced by major contractors in the utility scale market – the collapse of RCR Tomlinson, and the withdrawal of Downer, Decmil and Biosar – highlighted the contractual risks.
“There are some fundamental challenges in this space,” he says. “Probably the main one is that the margins to run these businesses are incredibly low. It is very very aggressive, fierce competition, and the industry is not doing itself any favours by being so aggressive.
“We deal with large corporates and they are incredibly aggressive in their approach to the market. If the solar industry was tougher and a bit more co-ordinated, it would be in better position to cope with this.
“If there is anything to learn (from our position), we should project the margin position and protect the liability position. There are huge cost pressures out there and I sincerely and truly hope that we are one and only victim, but change is needed.
“I’ve been doing this for 14 years. We have grown the business to something fairly substantial. So this is devastating.”
Todae Solar has offices in Sydney, Melbourne, Brisbane, Adelaide, Perth and Canberra , more than 70 staff, and a national network of fully accredited solar installers.
It was named the number 1 commercial solar EPC for system sizes of between 101kW and 1,000kW for five years running by Sunwiz, and won numerous awards, most recently from the Clean Energy Council in the 2019 Design and Installation Award for the 30-240kW category.
Warwick Johnston, from Sunwiz, says that Todae Solar was originally focused on the STC market, or under 100kW, but as competition intensified moved to large scale installations based around the LGC market (for systems above 100kW), and was successful in landing many large clients, such as shopping centres, with large rollout across a large amount of sites.
However, that market is being challenged by increased competition, both from rival contractors and bigger solar farms, and the fall in LGC prices, which now have negligible value over the long term.
“Todae Solar was a highly respected company,” Johnston said. “This isn’t the exit of a dodgy company, this is the exit of a very esteemed player in the industry, which contributed a lot to the industry and (its demise) will be universally mourned.”
Last year, Singapore-based solar developer Sunseap took a minority stake in Todae Solar. Kahn says there has been a huge response already to the announcement. He is hopeful that the business can continue in some form, but ultimately that will be up to the administrators.