One of the world’s busiest large scale solar contractors says it has taken a financial hit from problems with the PV modules, or panels, on one of its Australian projects.
Sterling and Wilson Renewable Energy, which at one stage claimed to be the busiest in the country after entering the market in 2018, revealed the financial hit in a recent earnings presentation to analysts to discuss its latest quarterly results.
The company said the panel problems, and the wait for replacements, at the unidentified Australian solar project where it has the O&M (operations and maintenance) contract led to a loss of generation at the site, and the payment of penalties.
“In this particular quarter, one of the Australian projects basically … so the panel, which normally doesn’t fail, right? Normally such equipments are never supposed to fail,” global CEO C.J. Thakur told analysts in response to a question about the company’s declining margins.
“I mean rarely it will fail. But somehow these top panels, I mean, I don’t know, because of what reasons, but then is still under the due diligence, but then these panels failed,” Thakur said, according to a transcript of the conversation posted on the company’s website.
“Although we took a lot of actions to airfreight the panels to ensure that the down time becomes less and all … but despite all the actions, there were unavailability for few days, right, for a few days. So, the generation loss during that day because of unavailability of one of the panels has really caused the penalty to be incurred.”
Sterling and Wilson says the issue had a marked effect on its margins in its latest quarter, which fell to around 18 per cent, down from its normal levels of 20 per cent to 24 per cent.
The project was not identified, but the company’s Australian portfolio – according to its own website – include the Western Downs, Wolobee, Miles and Wellington solar projects, as well as the Port Augusta hybrid project in South Australia.
Its work is now focused on its domestic market, underpinned by a 5-year agreement with Adani Green, and in Africa. Its presentation says that in the latest quarter, 65 per cent of its work inflow came from India, and 35 per cent from Africa.
In previous years, Sterling and Wilson Renewables has reported crunched margins in its Australian business, complaining about high labour costs, “phenomenally high” sub-contract prices, and the impacts of bad weather on its construction sites.
The utility solar business has been a difficult one for many contractors in Australia, with many suffering from damages claims arising from soaring costs. It was blamed on the collapse of major contractor RJ Tomlinson, while a number of smaller local and international contractors withdrew from the sector.
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Giles Parkinson
Giles Parkinson is founder and editor-in-chief of Renew Economy, and founder and editor of its EV-focused sister site The Driven. He is the co-host of the weekly Energy Insiders Podcast. Giles has been a journalist for more than 40 years and is a former deputy editor of the Australian Financial Review. You can find him on LinkedIn and on Twitter.
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