Kennedy EPC contractor not to cover delay costs - adjudicator

Kennedy project. Source: Windlab (www.kennedyenergypark.com.au).

February 7 (Renewables Now) - The EPC contractor for the Kennedy Energy Park (KEP) in Queensland, which combines wind, solar and energy storage technologies, cannot be forced to cover the project delay costs.

This has been determined in an adjudication under the Queensland Building Industry Fairness (Security of Payment) Act 2017. Instead, the companies behind the project, Australian firm Windlab Ltd (ASX:WND) and Eurus Energy Holdings Corp of Japan, will have to pay the contractor AUD 949,740 (USD 639,600/EUR 582,100) in milestone payments previously withheld, and a further AUD 6.6 million in variation claims and delay costs, pursuant to the adjudication determination.

In November 2019, Windlab announced that the original construction and commissioning programme for KEP was already 13 months behind schedule. It said the engineering, procurement and construction (EPC) contractor, a joint venture between Vestas Wind Systems A/S (CPH:VWS) and Quanta Services Inc (NYSE:PWR), failed to deliver in time a fully functioning, compliant generator performance standard (GPS) model and electrical plant meeting the network standards. 

Windlab and Eurus last year sought liquidated damages from the contractor, which disputed these and in turn requested certain milestone payments. The adjudicator has reversed the invoiced delay liquidated damages and indemnity costs sought by Kennedy, while also denying payment of AUD 19.6 million of the EPC contractor’s claims.

“Windlab is working with its 50% partner in Kennedy, Eurus Energy Holdings, and the project’s lender the Clean Energy Finance Corporation, to put bridging finance in place that will allow payment of the adjudicated amount, if required, and to allow the project to prosecute the substantive proceedings against the EPC contractor,” Windlab said in a statement today. The company pointed out that the adjudication determination is an interim payment decision and is currently under review for enforceability.

“If found to be enforceable, the determination will be the subject of future legal proceedings that will finally resolve the dispute between the parties, including Kennedy's entitlement to liquidated damages and indemnity costs,” Windlab added.

The Kennedy complex combines 43.2 MW of wind, 15 MW of solar and 2 MW/4 MWh of Tesla battery storage capacity. It started generating limited volumes of power in August 2019.

(AUD 1 = USD 0.67/EUR 0.61)

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Browse all articles from Tsvetomira Tsanova

Tsvet has been following the development of the global renewable energy industry for almost nine years. She's got a soft spot for emerging markets.

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