Sterling and Wilson Claims $28 Million from Shell Over Australian Solar Project Dispute
An Indian company, previously one of the foremost contractors in Australia’s solar sector, has initiated a significant legal action against Shell Energy over disputed costs linked to a solar farm in Australia.
Sterling and Wilson Renewable Energy, through its Australian branch, is seeking damages that could reach up to £28.03 million from Shell, plus interest and additional costs. This claim pertains to the Gangarri solar farm located in Queensland and has been submitted to the London Court of International Arbitration.
Background of the Dispute
Once heralded as Australia’s largest EPC contractor for solar projects, Sterling and Wilson has largely retreated from the Australian marketplace. The company was the principal contractor for the Gangarri solar facility, which was completed in 2022. Central to the current dispute are the harmonic filters associated with the project.
Details of the Claim
In a report to the Bombay Stock Exchange, Sterling and Wilson detailed that the upper limit of its claim, amounting to £28.03 million along with $US1.64 million in damages, is predicated on “Scenario A”, which entails full recognition of the 120 MW capacity inclusive of harmonic filters. Alternatively, in what it refers to as “Scenario B,” the company is claiming £20.6 million and an additional $US1.6 million in damages based on a reduced capacity of 95 MW that lacks harmonic filters.
The debate surrounding the use of harmonic filters in Australia has been contentious, often deemed necessary to mitigate the impact of new projects on the grid, although their necessity has been challenged by certain stakeholders.
Industry Context
An analyst from Sahi Markets highlighted that the global solar EPC landscape is fraught with high-value contracts that often operate on very slim margins. The analyst stated, “Projects such as the Gangarri solar farm exemplify the technical challenges like harmonic filter integration that frequently lead to disputes between developers and EPC providers.”
Further, the expert asserted that “strong contractual clauses and proactive legal management are essential for global EPC contractors to safeguard their margins against cost overruns.”
The Australian large-scale solar industry has seen various conflicts arise between developers and contractors, leading to challenges for prominent companies, including Downer, which have struggled as a result. Such disputes typically come to light when a party, usually a publicly listed company, is required to make an official disclosure.
