Developer, EPC agree standstill in Kennedy solar-wind-battery park dispute

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ASX-listed renewables developer Windlab has reached an agreement with EPC contractors – a joint venture between Danish Vestas Wind Systems and U.S. Quanta Services – on a four-week standstill in a bid to resolve the Kennedy solar-wind-battery park dispute outside the courtroom. The announcement follows an adjudication released last week that ruled Windlab will be the sole party to bear the costs of delays at the landmark project.

Pursuant to the adjudication determination under Queensland Building Industry Fairness, Windlab will have to pay the contractor $949,740 in milestone payments previously withheld, and a further $6.6 million in variation claims and delay costs. The adjudicator has also reversed Kennedy’s previously invoiced liquidated damaged and indemnity costs to the EPC contractor and denied payment of $19,615,375 of the EPC contractor’s claims.

For the four-week period, Windlab will not be asked to make any payments to the contractor but will also refrain from challenging the adjudication. “During this stand-still the parties will in good faith seek an overall commercial resolution of all disputed claims and provide [Kennedy Energy Park] with certainty concerning the outstanding network system registration and commercial operation of the project,” Windlab said in a statement to the ASX.

Construction of the Kennedy hub – combining 43 MW of wind, 15 MW of solar and a 2MW/4MWh Tesla battery – was completed in December 2018. The project was energized in August last year but its commercial operation has been delayed due to complications in the connection process. Today, the project is behind schedule for nearly a year and a half.

In order to meet complex, extended connection requirements, Windlab had to add both a statcom for voltage regulation and a synchronous condenser for system strength, making the Kennedy hub the first project to do so in the Ergon Energy network. While the installation of additional components added to project costs, the developer also reported problems with the EPC contractor and inclement weather, as post-cyclone flooding prevented access to the site by network commissioning crews.

The Kennedy Energy Park is jointly developed and owned by Windlab and Japan-based Eurus Energy. Located near Hughenden in North Queensland, the project has signed a 10-year PPA with Queensland state-owned generator CS Energy. Windlab revealed plans to grow the Kennedy hub much bigger to 1200 MW, but this was later deprioritized due to uncertainty around connection solutions.