UK renewable energy developer Foresight Group has revealed it has suffered a significant write-down on the value of its Oakey 2 solar farm in Queensland, after the troubled project was damaged by yet another storm in January this year.
The 55MW (ac) Oakey 2 project, which is backed by $55 million in debt from the Clean Energy Finance Corporation, is owned by the Foresight Solar Fund Ltd, and had been expected to be operational by the end of 2018, but a hailstorm that year destroyed part of the installation.
Another deadline for late 2019 was missed and now the project owner is predicting final commissioning in the second half of 2020, after it said the project suffered more damage from another storm in January of this year.
Because of this, it has now written down the value of the project by £6.9 million ($A12.5 million), joining a growing list of developers and contractors who have suffered significant losses from delays and cost-over-runs from construction and the increasingly complex connection and commissioning process.
“The Oakey 2 asset has experienced further construction delays following storms impacting the site, with the expected connection date delayed to the second half of 2020,” it says in its most recent annual report.
“As a result, the valuation of Oakey 2 has been decreased by £6.9 million to reflect the impact the commissioning delay will have on project revenues,” it says in its annual report. “The Investment Manager is working closely with the network operator and project contractors to minimise the financial impact to the Company.”
It wasn’t the only hit to the developer’s accounts for calendar 2019, as it also reported a £2.9 million loss on the value of its Australian solar portfolio as a result from changes to marginal loss factors (MLF) and another from £3.3 million from the change in prices of large scale certificates.
The Foresight Solar Fund owns 50 solar projects in the UK, and has interests in four solar projects in Australia. Apart from its wholly owned Oakey 2, it has shares of around 49 per cent in the 25MW Oakey 1 and 17.5MW Longreach solar farms in Queensland, and 48.5 per cent of the 88MW Bannerton solar farm in Victoria.
All have suffered issues of some sort. The company says Bannerton and Oakey 1 experienced construction and commissioning delays due to the new grid commissioning requirements introduced by AEMO in 2018, and as a result of EPC contractor RCR Tomlinson going into liquidation.
When it finally reached full production, Bannerton – along with four other solar farms – was then hit by an oscillation issue on the network that cut its output by half from September 2019 to mid April, 2020.
Longreach has also experienced limited grid curtailment since completion of commissioning due to reduced loads in the area and a low capacity grid transformer, Foresight says. It hopes that issue will also be resolved during the second half of 2020.
The problems at Oakey 2 have been more intense. The storm damage in October, 2018 required a significant area of the project to be rebuilt, but after reaching initial export in April last year it then ran into commissioning delays as a result of initial grid compliance tests.
As a consequence, further equipment had to be installed, leading to more delays, and then a second storm in January, 2020, affected about 15 per cent of the site, further delaying commissioning works to late 2020.
According to the graph above, from Paul McArdle at Global-Roam, the Oakey 2 solar farm has not produced anything for more than two weeks after being allowed to generate up to a hold point of 40MW before that. He has more to say about the project’s output on his Watt Clarity website here.
Many large scale wind and solar projects have suffered delays of some sort in the construction, connection and commissioning process, but some of the delays have been so severed it has causes significant losses for developers and contractors.
These include Enel Green Power (Bungala 2), Total Eren (Kiamal), and Neoen (Bungala), along with local developers such as Windlab (Kennedy Energy Hub).
Major contractors have also left the market, including RCR, Downer Group, Greek-owned Biosar (which also worked on Oakey 2 and Kiamal), and Decmil, which has withdrawn from full EPC contracting and now only does balance of plant.
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