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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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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Hayman and Daydream Solar Farm built by First Solar

First Solar have won a module supply contract for Edify Energy‘s Daydream solar farm and Hayman solar farm in Queensland. RCR Tomlinson Ltd (ASX: RCR) was awarded the $315m contract for the farms and have decided to give the supply contract to First Solar, who now have over 500MW in the pipeline over the next 12 months. For their part, 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 talking to RenewEconomy.

Daydream Solar Farm and Hayman Solar Farm

First Solar - Daydream Solar Farm
First Solar – Daydream Solar Farm (source: firstsolar.com)

The Daydream solar farm will be 180.7MW and the Hayman Solar Farm will be 60.2MW – the two projects are located just north of Collinsville in North Queensland – in the Whitsunday region. According to ELP.com, they will use single axis tracking technology which has been commissioned from Array Technologies, and over 2 million advanced thin film PV modules from First Solar, to produce around 531,000 MWh of renewable energy every year.

Edify signed a power purchase agreement with Origin Energy for the Daydream solar farm’s output (they’ll also buy the renewable energy certificates), but the Hayman Solar Farm will operate as a merchant plant.

About First Solar and Edify Energy

First Solar, Inc. are an American based PV manufacturer of rigid film modules, or solar panels, and also a provider of utility-scale PV power plants. In 2009 they were the first solar panel manufacturer to lower their creation cost to $1 (USD) per watt. According to Wikipedia they produced CdTe-panels (cadmium telluride) with an efficiency of ~14% at a cost of 0.59 USD / watt in 2013. They’re the second largest maker of PV modules worldwide.

Edify Energy are an Australian renewable energy development and investment company who have led the financing and delivery of over 30 utility scale solar PV projects at a cost of over $1b. For the Daydream solar farm and Hayman solar farm, they won ARENA (Australian Renewable Energy Agency) funding last September under their large-scale solar funding round.

More good news for Queensland solar farms – construction on the projects will commence almost immediately – scheduled for Q3 2017, with module delivery to arrive in Q4 2017 and Q1 2018.

 

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