Construction Giant Quits Australian Solar Sector; “We’re Out”
The Downer Group, a massive construction firm and one of the largest contractors in Australia has announced it will cut ties with the solar business, citing difficulties and shortfalls in current renewable technologies.
The news came via CEO of the Downer Group, Grant Fenn, who told analysts in a phone briefing on the company’s six-monthly earnings. “We’re out of solar,” he said, adding that the market was drying up, particularly in the past twelve months. This was reflected in the company’s six-monthly report, with profits down a reported 35%.
“Developers, contractors and bankers all struggle to come to terms with the risk of large power loss factors, grid stability problems, connection problems, and equipment performance issues,” Fenn said. “These problems will no doubt be sorted in time, but right now, we don’t see a construction market in the short to medium term that will accept our terms and risk position on these matters… So, we’re out.”
“Developers don’t want to take the risk, so why would [a] poor old contractor? So we are not doing that,” Fenn said. “The biggest issue in solar is our risk position. There is no market position because no one is closing solar deals… it is very difficult,” he added.
Downer has announced that it will deliver on the remaining active contracts the company has, including a number of wind farms and a few solar farms, all of which are scheduled for completion in May, 2021.
According to Renew Economy’s Giles Parkinson, “the decision adds to, and highlights, the increasing woes of the Australian renewables industry, which is suffering from a dramatic slowdown in construction, partly due to the lack of federal policy, connection issues and delays from grid congestion.”
Downer has been responsible for some of the largest renewable energy projects in Australia, including six solar farms and more than a dozen wind farms since 2003. The company’s CEO said that the majority of these wind projects were finished with next to “zero margin” for the company.
“The grid issues are very complex,” Fenn added, “the regulators are doing their absolute best to ensure the stability of [the] grid is maintained. That is proving very difficult, and it is impacting on the solar market very significantly,” he said.
“You see it with the solar farms that have been built- volatile power loss factors outside of what they were expecting, you are seeing it with connections into [the] grid, particularly where there are lots of solar farms… what that means is that there is very much a hiatus of anything coming to market.”
Fenn concluded by stating that “we have still got a series of issues with equipment, particularly inverters. Sure, they will be solved as fast as they can, but when I look at it for the next couple of years, it is very challenging.”