Extension of solar-thermal power generation project development case and its enlightenment

Polaris solar PV net news: may cause solar-thermal power generation projects are postponed for a number of reasons, such as the proposed project only to find important archaeological clues, or lengthy projects under local government examination and approval procedures, and so on. But a lot of extension of solar-thermal power projects tend to have one thing in common, that project developers have encountered serious financial problems.

Deferred compensation of the expenses of the project item extension of duration and default provisions of the EPC concluded with project owners decided. Shams1 solar-thermal power station is located in Abu Dhabi, for example, the project extended for a full year, it is understood that projects deferred compensation costs about $ 100,000 a day, due to deferred compensation costs of the project amounted to about $ 36.5 million.

In order to more fully present solar thermal project has delayed the construction of the economic impact, below we take a look at the different parts of the globe who have delayed for years or for a variety of reasons will delay construction of solar thermal power projects. Our main statistics of the United States, and India and the U.A.E. and South Africa and other countries part of solar-thermal power project and construction cause of the delay of these projects, project planning, schedules, cost overruns, and the likely legal consequences for investigated.

United States California: complex projects approval procedure

When we were in the United States when research and consulting for solar thermal projects delayed, majority view is that the complexity of the approval process is a major reason for delay construction of the project. Palen project is an obvious example.

On June 27, 2012, BrightSource companies from the United States SolarTrust the company won development of 500MW capacity Palen project, after 21 months of the approval process, the California Energy Commission (CEC) agreed to the project’s development technologies from trough to Tower.

On September 12, 2014, the California Energy Commission released for Palen project announcement of preliminary approval, but only for one 250MW project. But after only 14 days later, on September 26, 2014, as two shareholders Palen project (BrightSource and abenge companies) renounced BrightSource company one of the project’s development plan.

But Palen end the project’s fate was not so. On November 4, 2014, abenge company announced that it would continue to develop the project, and before the design is different, the project will use the Abengoa company Tower of molten salt technology, the project will use its massive heat storage technology.

Nevertheless, Palen project before the new design is likely to go through a lengthy approval process. Abenge company still had not submitted a formal application, the California Energy Commission’s work for the next phase of the project have not made any comments.

In order to render the average processing time of solar-thermal power project in California, shortly before the statistics below 5 California solar-thermal power generation projects submitted to the date of application for approval for the first time and approved by the California Energy Commission’s final date.

Project deferred compensation is a very complex task. United States Holland ˙ Knight law firm (Holland&KnightLLP) partner, is also a large project approvals the approval of California expert said JenniferHernandez: “project construction cost and cost of technology is already quite high, but the earliest project share is to approve, if not successfully passed the audit, the project directly, and he died. ”

In addition, Hernandez said, adding: “some had already given an undertaking to build the project before now because of environmental problems and not through audit. The financial markets are concerned with light and heat is a very important signal. “What’s worse is, Hernandez reminds us that these items often require multiple audits:” for example, developers despite the adoption of the Energy Commission’s review and approval, but that does not mean that the project has passed the federal approval process. ”

Construction challenges

Once the developer through a review and approval of all, you can start construction. Crescent dunes built in capacity 110MW in Nevada for molten salt Tower project, which started in September 2011 in May 2014, construction is complete, lasting 32 months. But SolarReserve finish construction of companys originally planned for the end of 2013.

As the first developer of the project, Chief Executive of SolarReserve KevinSmith follows to delay the project, although construction is very stable, but it is a large and complex project. He said that nothing to do with the extension of the project and the financial and technical, in fact can be said to be caused because of this large scale project on special needs of logistics.

He expressed: “the construction of solar-thermal projects are usually in remote areas, you must be coming from the different parts of the project construction of various supplies required, these mass transportation problems could all be potential factors contributing to project delays. ”

India: CSP1 of AREVA to build solar thermal power plants

Some greater flexibility in some of the reasons for the delay and the influencing factors concerned, possibly involving the application of new technologies and changes in some enterprises for the development projects of decision. AREVA in India, Rajasthan developed capacity for 125MW CSP1 Fresnel solar-thermal power station is the case.

The project belongs to India Jawaharlal Nehru national solar energy plan, the first phase of the project, approved December 2010, but on November 11, 2014, until 4 years after the project was officially put into commercial operation. In fact the project was the first challenge in the world installed capacity exceeding target of 100MW Fresnel solar thermal power station solar-thermal power project (largest Fresnel solar thermal projects are in operation at that time Spain installed capacity of 30MW PuertoErrado2 power station).

Since AREVA technology provider May 2013, the project decided to sell its solar thermal operations and photo-thermal line began, the project was troubled. AREVA in August 2014, its light and heat business eventually fully divested. Meanwhile, at the time of incorporation of the project also encountered many difficulties, including synchronized operation between two dust storms and power station and so on.

CSP1 EPC as a major head of AREVA’s global Vice President of sales, JayeshGoyal said: “the claims and fines on this item will be fully realized after the commercial operation at the plant are discussed. “

For the construction of the project, JayeshGoyal, said: “in retrospect, probably everyone will realize that using the 18-24 month in a remote area completed the construction of the new project of this magnitude is indeed overly optimistic. If starting from contracts with developers to plant the total time for networking is about 3 years, it should be relatively affordable. This standard with the global peer-level solar thermal power station construction is consistent with the time that is spent. “

India Jawaharlal Nehru national solar mission phase consists of seven large solar thermal power generation project, originally scheduled for May 10, 2013, all completed and put into operation, but failed to put into operation a power station when it expires, India after studying the Government waive economic penalties for project developers, and will provide for the commissioning of a 10-month extension until March 9, 2014. Godawari trough solar thermal power station 50MW only on June 5, 2013, grid-connected power generation. The remaining six projects have failed to put into operation prior to March 9, 2014. Suggesting that India Government for large-scale development of solar thermal power plants are more optimistic for the first time, but the reality shows that, for the first time facing the development of technology and the experience was significantly larger than anticipated, this could also be a lot of solar-thermal power generation in emerging markets to develop large-scale solar thermal power projects have to deal with for the first time.

U.A.E.: Shams1 power station construction difficult problem encountered

Map: of Shams1 solar thermal power station in Abu Dhabi

Extension during the construction process of the most severe solar-thermal power project is the abenge, Masdar and Tatal Shams1 power station of the three companies jointly develop, during the construction of the power station in stagnation for a whole year. A Shams1 power plant developer divulged more exposed, unwilling to identify himself, according to the Shams1 project formulated the liquidated damages clause in the contract, the project roughly $ 100,000 per day in deferred compensation for the expenses incurred, so the project EPC contractor should pay the deferred compensation costs a staggering $ 36.5 million.

The information provider said: “the EPC contractor (Abener and Teyma) didn’t finish project delivery. Before they build a lot the trough solar thermal installed capacity of 50MW power generation project, but this was their first the trough solar thermal power generation installed capacity of 100MW project designs to previous projects have a very big difference. In fact, every time you try something new, you will of some unexpected factors that affect the overall progress. ”

In addition, local weather conditions and some geological characteristics of a certain impact on the project. Lack of water and wind, the high concentration of dust to the DNI, and sandy soil, these factors all contributed to the project.

Abandon the project or be held liable for?

However, such as Shams1, a total investment of $ 600 million in large-scale solar thermal project, in case of default, interested parties can afford such a high fine? South Africa business law firm DLACliffeDekkerHofmeyr KieranWhyte, Director of the Department of projects and infrastructure, give up a solar thermal project it is not so simple. He suggested South Africa national electricity company Eskom in South Africa renewable energy independence plan (REIPPP) to assume the role of underwriters.

Whyte said: “every developer in the world are trying to get a project development opportunities, but think that success is often required to meet investors and project acquisitions for the project’s duration requirements. “At the same time, Whyte warned:” the project’s extension require the contractor to provide the reasons for, but before such situations did not enact special provisions. So the project contractor also must pay the appropriate penalty. ”

Whyte explains: “according to South Africa REIPPPP with the requirements and project contract price 20%-30% as penalty payments. For example, a developer building a contract of 8 billion South Africa RAND (about 709997235 dollars) project, then they’ll contract 20% of contract payments for breach of contract. Once the developer defaults, project offtakers will demand its 1.6 billion as compensation for South Africa RAND (about 141948360.62 dollars) for breach of contract. ”

Whyte added: “If the developer decides to abandon the project development rights. Under South Africa REIPPPP plan, the winning bidder will be charged 200,000 South Africa Rands per MW for breach of contract. Therefore, for a project that installed capacity of 100MW, liquidated damages would reach $ 1780403. If developers abandon a project, they will comply with their contract with the underwriters compensation for certain project termination costs. In addition, they will also pay for project development using the ownership of the leased property, at the same time required for a project to develop a variety of license transfer procedures. Each project provides for deferred compensation cost is generally different, concrete will be in accordance with local legislation to adjust the deals, while also taking into account specific requirements for project offtakers. Therefore, South Africa deferred compensation of costs of solar thermal power generation project with U.A.E. should be different. ”

The importance of financial models

So, solar-thermal power project developers to reduce the compensation project defaults risks what can be done about it? Chadbourn and Parker of New York law firm (Chadbourne&ParkeLLP) partner in renewable energy project finance has extensive lectures PaulWeber Summary says: “the best strategy is to: first of all, to let insurance covers all events of force majeure, such as strike or other factors that may cause project delays. Second, the developers plan to project financial model, so they will be able to cope with any contingencies that might occur. ”

Weber said: “when a company is the developer and EPC, he could be for vendors to develop legally binding provisions. For example, if a heliostat did not arrive on time, then the supplier will be liable for breach of. ”

Whyte think ahead financial model is very important. He added: “the project delay is subject to a number of negative consequences, the best way is to let it happen, so developers should try to take into account all the possibilities in the construction of the project. Developers the best financial model, judgment and determine what is needed, what time should finance, when repayment and extension what is the financial cost of the project, and so on. ”

According to the development of solar-thermal power project was postponed until experience, developers and policy makers must ensure a feasible time for project planning and implementation table, otherwise they will face the high financial costs due to delay. However, as the chain of solar-thermal power generation industry continuously improved and developed, solar-thermal power generation market will get more obvious improvements in this area.

Original title: extension of solar-thermal power generation project development case and its enlightenment

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