A RIVERLAND council will make money – rather than lose it – from the collapse of a $12 million solar farm contract.
Renmark Paringa Council was last week informed by French-based Akuo Energy that it would be unable to complete a proposed $12 million – 4.98MW – solar farm at Renmark’s Jane Eliza Estate.
Council CEO Tony Siviour said Akuo indicated construction costs associated with the site, and decreasing network capacity, was behind the decision.
“Akuo advised Council that it was unable to reach financial close on the project due to a variety of factors,” Mr Siviour said.
“(These included) the cost of building a flood levy bank, reduction in the SAPN connection capacity and reduced merchant and power purchase agreement revenue assumptions.”
However, Mr Siviour said a “non-refundable” payment from Akuo, plus payments from leasing the land, would prevent council from losing money due to the decision.
“Due to the risk-averse approach to the project, council requested and received a non-refundable $200,000 upfront payment,” he said.
“In addition, the parcel of land has been leased by Akuo since December 19, 2018, at a cost to them of $82,000.
“Despite the project not proceeding council has had a net financial gain…of $141,000.
“In addition Akuo have offered, at no cost to Council, the intellectual property of the project.”
Akuo was awarded the solar farm contract in December 2018.
Yates Electrical Services (YES) managing director Mark Yates said his Paringa-based company would have provided a local alternative for council.
“Council weren’t ready to invest in a project of this nature, so selecting an outside company to bring the funding to the area was another option for them,” Mr Yates said.
“I felt at the time that YES presented a good business case to council and was personally disappointed that they didn’t want to proceed.
“However, I do appreciate that councils will approach large investments into new markets quite differently to privately owned companies.”
Mr Yates said YES was invited by Akuo “to quote a large scope of works as a major contractor” for the project.
“We spent quite a bit of time back and forth with Akuo over several months, visited each other’s offices, and got to know some of their team well,” he said.
“However, in the end we decided to pass on submitting our final offer (as) engineering detail was missing that we felt was required to submit our final price.
“We suggested that Akuo spend the money to obtain this engineering, but they weren’t willing to do that until they had our fixed price first to reach financial close.
“Ultimately the downside risk to our business to move forward outweighed the upside.”
Mr Yates said while council’s proposed project had become “less appealing”, potential remained for solar farms to be built at other Riverland sites.
“The need to construct the floodbank makes this project less appealing to solar farm developers,” he said.
“There is still network capacity available in the Renmark substation – and other Riverland towns – for additional solar farms of this size.
“(We) would like to work with both councils and private individuals or businesses to unlock and develop the most viable projects for the region.”