RCR Tomlinson Solar Farm Writedowns

Australian solar contracting company RCR Tomlinson has taken a $57m write down on the Daydream solar farm and the Hayman solar farm, which are owned by Edify Energy and to be installed in North Queensland.

RCR Tomlinson Solar Farm Writedown

We reported earlieir this year on the Hayman and Daydream solar farms and how First Solar will be handling the installation for Edify – at that time everything looked rosy but it appears that a couple of major factors have led to cost and time delays. Edify have cited “external” delays, bad weather, and local issues like poor ground quality.  Also being blamed are the increasingly stricter requirements being imposed by the Australian Energy Market Operator which are affecting solar farms Australia-wide. 

RCR Tomlinison Daydream solar farm in Collinsville, Queensland.
RCR Tomlinson -Daydream solar farm in Collinsville, Queensland. (source: thewest.com.au)

As of last year, RCR have over half a Gigawatt of large-scale solar projects in their order book and over a Gigawatt currently being developed or progressed under early contractor involvement processes, according RCR Managing Director & CEO, Dr Paul Dalgleish (who has since left RCR). As a result of the writedown RCR are now attempting to raise $100m from investors and have had to offer a significant discount on RCR shares on a one-for-1.65 basis at $1 each. This represents a ~65% discount on the stock’s last trade price ($2.80).

According to RenewEconomy, Tomlinson has written down $57 million on the $315 million contract values for both the 150MW Daydream and the 50MW Hayman solar farms owned by Edify Energy. They’re both located in North Queensland and both nearing completion.

A statement to shareholders noted that: 

“These project-specific issues required the Company to continuously revise its execution methodologies to mitigate delays, leading to increases in subcontractor costs (both people and plant) and logistics cost overruns.

“As a result of these cost overruns that arose over the life of the Project, RCR has realised cumulative write- downs of $57 million from the tendered margin on the Project.”

Some bad news for solar farms in Australia but we have no doubt that these projects will end up completed and can start making their investments back. We’ll be watching closely how the AEMO’s ongoing changes to legislation affects the many other solar farms currently in various stages of completion/operation. 

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Beryl Solar Farm Sold To New Energy Solar

We’ve written about the Beryl Solar Farm reaching a financial close back in May – now the 87MW (108MW according to the AFR) project has a new owner and is continuing construction. 

Beryl Solar Farm Sold To New Energy Solar

Beryl Solar Farm Sold to New Energy Solar
Beryl Solar Farm Sold to New Energy Solar (source: FirstSolar.com.au)

According to PV Magazine, the farm has been purchased by New Energy Solar – who also bought the 50MW Manildra Solar Farm for $113m last month. Both farms were previously owned by First Solar and the Beryl farm will be using their 420W large-format Series 6 thin film PV modules. Beryl also comes with a 15 year PPA with Transport for NSW – who will purchase 134,000 MWh from Beryl Solar Farm each year – using the power for the Sydney Metro Northwest railway. This long PPA with a AAA rated customer (i.e. the government) makes the farm a great buy in its current shape.

The EPC project was estimated at $150m according to Reuters, but it’s now estimated at $187m. Downer Utilities started work on the project in May and hope to have it finished in mid 2019. The farm will produce enough energy to power 25,000 households and doesn’t require any water for its electricity generation.

New Energy Solar said the cost of the farm won’t be announced but it was pegged to a target for five-year annual average gross yield of 8.2%, in comparison with yield on its existing portfolio of about 6.8% p.a, so by those metrics it looks like a canny purchase. 

New Energy Solar’s CEO, John Martin, discussed how the extra-long 15 year PPA helped get the sale of this project over the line:

“Beryl, New’s second investment in Australia, will further enhance the scale and contracted cashflows of our Australian portfolio,” said Martin. “Following the Manildra acquisition last month, we are delighted to be consolidating our relationship with First Solar through this second sizeable transaction in the Australian market.”

Martin continued to say that ~69% of the energy provided by the Beryl project will go to Transport for NSW – with the rest slated to package up with a 20MWh battery and sold to a corporate customer as commercial solar

To learn more about the project from the First Solar website please click here

If you’re interested in solar employment and working at the Beryl Solar Farm, please click here to visit the Downer Group’s careers website.

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Beryl Solar Farm reaches financial close.

First Solar have reached a financial close at the 87MW Beryl solar farm in New South Wales. The farm will be one of the world’s first to use First Solar’s Series 6 modules (with 420+ watts per module) and will be constructed by Downer EDI. 

Beryl Solar Farm – Construction and Financial Close

Beryl Solar Farm
Beryl Solar Farm (site: firstsolar.com.au)

Beryl is around five km from Gulgong in central west NSW. This is one of NSW’s biggest completed solar farms but there are some upcoming projects which will dwarf it (such as the 200MW Sunraysia solar farm in Balranald or the $380m Gunning Solar Farm – with solar there are always bigger plans in place!).

According to a press release on Reuters, the engineering, procurement and construction (EPC) contract is worth about $150m and construction will commence soon.

TransGrid’s head of business growth Richard Lowe discussed how they will be able to integrate into the project: “The project is located approximately 250 metres south of TransGrid’s Beryl Substation, so we have been able to offer a very competitive and attractive asset connection plan to First Solar,” Lowe said in a statement on the TransGrid website.

“The Beryl Solar Farm will connect directly into TransGrid’s high-voltage electricity transmission network via a 66kV connection to a new bay at Beryl Substation.

“This connection will allow the export of 87 megawatts of power into the National Electricity Market – enough to serve the needs of approximately 25,000 average NSW homes, while the associated carbon emission displacement is equivalent to taking about 45,000 cars off the road.” the statement from TransGrid continued.

TransGrid will oversee the construction and operation of a new substation at the Beryl solar farm so they’re able to then connect that to the existing Beryl substation. This will happen in the second half of the year. 

If you’d like to learn more about the Series 6 module please click here to watch a video on the manufacturing process. 

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Trump imposes Solar Tariff on Panel Imports

President Donald Trump has imposed a solar tariff – on solar panel imports, which is expected to have myriad repercussions for local manufacturers and their ability to compete against competitors in China and South Korea. Will this have an impact on solar panel technology, and what will it mean for local manufacturers?

Trump’s Solar Tariff – What Now?

An ostensible slap in the face to the renewable energy, Trump’s idea of raising import tariffs by up to 30% may have a few benefits, at least for USA based companies. 

Donald Trump Imposes USA Solar Tariff
Donald Trump Imposes USA Solar Tariff (source: @realDonaldTrump via Twitter)

First Solar Inc., USA based panel maker saw their shares jump by almost 10% in after-hours trading. Shares of U.S. home appliance manufacturer Whirlpool jumped also 5 percent on Tuesday on the back of the news, as washing machines have also seen a tariff imposed on them.  

According to Time magazine, however, the move will stifle a $28 billion industry not only overseas, but the raised costs of solar panels will also harm the American solar industry. The Solar Energy Industries Association has projected tens of thousands of job losses in a sector that currently employs 260,000 people, America wide. These tariffs are on the back of Trump’s administration pulling out of the international Paris climate agreement, and rolling back regulations on power plant emissions. 

According to a statement made by President Trump on Monday, the first 2.5 gigawatts of imported solar cells will be exempt from the tariffs. Four years of tariffs will then start at 30 percent in the first year and gradually drop to 15 percent.

“Developers may have to walk away from their projects,” Hugh Bromley, a New York-based analyst at Bloomberg New Energy Finance, said in an interview before Trump’s decision. “Some rooftop solar companies may have to pull out” of some states.

CNBC reported that Credit Suisse analyst Susan Maklari told her clients that Trump’s decision wasn’t all that surprising.

“All those producing in the US will now face a similar cost structure, creating a more level playing field,” wrote Maklari. “Based on filings by LG and Samsung, they have a combined roughly 33 percent share in the U.S. suggesting 3 million washers are brought in annually. That said, both have commenced construction of U.S.-based capacity, which is expected to come on line over the next 12-18 months. As such, we expect this decision to become less impactful in time.”

Only time will tell what impact this has on the renewable energy industry as a whole, but these sort of protectionist regulations are rarely a step in the right direction. Watch this space…

 

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SMC / Sun Metals Solar Farm Project

Korean owned North Queensland zinc refiner Sun Metals has begun building a 125MW, $199m solar farm to underpin its refinery in Townsville. The Sun Metals solar farm will be completed next year and is another of many massive ongoing solar projects in North Queensland

Sun Metals Solar Farm

Sun Metals Solar Farm
Sun Metals Solar Farm (source: sunmetals.com.au)

Construction on the solar farm began in May – it’s expected to be completed early next year, and fully commissioned (providing renewable energy to the refinery) by April. The project will include 1.3 million solar panels and, according to a release by the Queensland Government, will create 210 solar powered jobs.  Queensland energy minister Mark Bailey praised the project, saying “Use of renewable energy in this way not only demonstrates it as a reliable energy source for large-scale industry, but that Korea Zinc is committed to the people of North Queensland, to minimising carbon emissions and protecting the Great Barrier Reef.”

First Solar have been chosen to undertake the project. They have over 500MW in the pipeline for the next 12 months, including the Hayman and Daydream solar farms

About Sun Metals

Sun Metals is a subsidiary of Korea Zinc – they’ve already spent around $1b on the Townsville zinc refinery and, according to the Courier Mail, the 116MW the Sun Metals solar farm provides will account for around 1/3 of their energy needs – so there’s plenty of room to expand. PV Magazine said Sun Metals produce 225,000 tonnes of zinc p.a. and that requires over 900,000 mWh of electricity. 

Sun Metals CEO Yun Choi said in May that “The SMC Solar Farm investment of $199 million is the first step in Korea Zinc ensuring the long term viability of the existing refinery and also underpinning the potential for its expansion using world class new technology, with an investment decision due in late 2017,”

Jack Curtis of First Solar was quoted as saying that “This project represents the viability of the commercial and industrial solar market in Australia and the growing trend of major energy consumers owning and operating renewable energy assets.”

Whilst far from being the first example of renewable energy in resources, it’s great to see these big companies work at reducing their carbon footprint as the benefits (e.g. cost, price fluctuation protection, environmentally friendly nature) of solar becomes more and more attractive. 

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