Leading renewable energy developer Windlab says it has been forced to declare “force majeure” on the development of the world-first wind-solar-battery project, and it is likely to put aside plans to expand the project in the short term in favour of others that will be easier to connect.
The stock exchange listed Windlab revealed the “force majeure” in its half-yearly results delivered late Thursday. It blames connection problems, the performance of its EPC contractor, and flooding from the recent cyclone events, which prevented access to the site by network commissioning crews.
“As a consequence, the project has notified its off-taker CS Energy of a force majeure event extending the PPA’s sunset dates,” the company said in a statement.
Energisation of the first stage of Kennedy is now expected in the second quarter of this year, but the company said it had legal advice that suggested it would be able to recover any losses from its EPC contractor.
But Windlab says it is now unlikely to push ahead anytime soon with the larger “big Kennedy” project that would have combined wind, solar and storage into a massive 1200MW “baseload renewables” plant, because of uncertainty about connection issues, and the state government plans for a so-called “clean energy hub”.
Instead, it is looking to prioritise another 250MW project that is located closer to a major transmission line. The release did not say anything more about the nature of that project.
Windlab is the latest developer to run into issues with connections, and problems with its EPC contractor. Windlab appears to blame both a complex regime, and sudden changes made by regulators and market operators in response to the influx of distributed generation.
It said that large scale wind and solar plants were now facing more difficult connection regimes, which increased with a new system imposed from February 1, and this would push up the cost of wind and solar farms in the short term.
“The nature and rapid implementation of these new rules (on wind and solar plants) increases complexity of obtaining grid connection approvals, compliance and registration, with a direct flow on to the cost of development and capital cost of the projects,” CEO Roger Price said in a statement.
“This has become an industry-wide problem, contributing to a number of well-publicised project delays and cost overruns that have impact some wind and numerous solar project developers and constructors.
“It will be more expensive to connect future wind and solar projects in Australia.”
The connection issues contributed to problems at RCR Tomlinson, which collapsed last year, and resulted in damages claims laid against numerous contractors by developers including Neoen Australia. Others, including Downer Group, have warned about the impact of the connection problems and write downs.
Windlab also expressed frustration with the Queensland government, its lack of clarity over the proposed Clean Energy Hub, and uncertainty over the Copperstring project, which led it to conduct its own studies about grid capacity and its decision to switch focus to a new project.
Windlab has also had to delay the development of its 104MW Lakeland wind project south of Cooktown after the “surprising and disappointing” withdrawal of financial backer Infrared Capital Partners last November.
Delays in finding a new partner meant that the project has been pushed into the new connection regime and will have to add a synchronous condenser to the project. This will add to costs, although it says this may be offset by the procurement of more modern and more efficient turbines. Financial close is still expected to be completed this year.
On the positive side, it began production from the Kiata wind farm in Victoria, which has delivered a capacity factor of more than 48 per cent so far, and this week signed a $10 million deal with Eurus, its partner in Kennedy, to develop its huge pipeline of projects in Africa.