9 May 2022

Buyers are flocking after Mugga Lane Solar Park enters administration

| James Coleman
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Solar farm

Mugga Lane Solar Park supplies 24,500 MWh of power into the ACT’s electricity network. Photo: Mugga Lane Solar Park.

After entering voluntary administration last week, potential buyers are circling Canberra’s Mugga Lane Solar Park.

The 52-hectare project along the Monaro Highway in Hume was completed in 2017 and feeds approximately 24,500 MWh into the ACT’s electricity network, enough energy to power around 3000 households.

Late last week, Scott Langdon and David Osborne of KordaMentha were appointed voluntary administrators “due to the recent external effects on the financial arrangements of Mugga Lane Solar Park”.

It is understood the owners were facing difficulties trying to refinance the solar farm and decided it was easier to go into administration.

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The sales process began immediately, with Mr Langdon expecting a “high level of international interest … due to the unique nature of the asset”.

In 2013, Chinese firm Zhenfa won the ACT Government contract to supply solar power from the site before the Australian arm of Zhenfa was bought out by the management firm Maoneng Group.

The solar farm was designed and built by UGL, regarded as one of the best solar PV construction companies in Australia.

The project was delivered on budget and began exporting power to the Gilmore Substation (on Isabella Drive) via underground cables six weeks earlier than planned.

Solar farm

Chinese firm Zhenfa won the ACT Government contract to supply solar power from the Mugga Lane site in 2013. Photo: Mugga Lane Solar Park.

The facility is expected to save around 480,000 tons of CO2 gas emissions over its 25-year life cycle.

The news comes a week after the Maoneng Group announced plans to “build Australia’s largest renewable energy hub” in Merriwa, regional NSW. This would include a 550 MWh solar farm and a battery with a power output of up to 400 MW and four hours of storage.

Maoneng said these plans remain unaffected, noting that Mugga Lane Solar Park is a group subsidiary asset operating under a ‘Special Purpose Vehicle’ (SPV) structure.

An SPV, also known as a bankruptcy-remote entity, is a separate subsidiary created by a parent company to isolate financial risk. Its legal status as a separate company makes its obligations secure even if the parent company goes bankrupt.

“The appointment of KordaMentha, the voluntary administrators, only relates to Mugga Lane Solar Park and does not affect other group operations or any related entities,” a Maoneng spokesperson said.

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According to KordaMentha, there have already been “many approaches” from buyers. The administrators will now enter a formal process and call for bids.

Mr Langdon said Mugga Lane Solar Park would continue to operate on a ‘business as usual’ basis and there will be no disruption to operations or any stakeholders.

“The voluntary administrators will work collaboratively with the director to run an international sale process and maximise competitive tension and the financial outcomes for all stakeholders and creditors,” he said.

“We encourage anyone interested in purchasing the Mugga Lane Solar Park to contact our office immediately.”

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Another massive waste of money , solar farms across the country going broke , even with paying a premium for the power . It’s time to admit this a failure and go back to coal or instate nuclear . Global warming is a scam

If it was community owned it would be a success. Private energy entities have to make a decent profit to be deemed worthwhile. It’s not a failure just because they can’t turn over a huge profit.

It’s a economic failure , plus if got heaps of subsidies. Should of built a coal power station and lowered the price of energy

Capital Retro8:37 am 13 May 22

Leigh Brady says: “Either way I guess we’ll see if it sits there and gathers dust…….”

Actually, that is one of the problems as it is continually bombarded with dust from recycling activities at MLRMC. They have a tractor fitted with special brushes to clean the panels but to be effective that would have to be done every day.

Can the community start a ‘Go Fund me’ campaign so the community can own the facility

The money from the go fund me should be used to build a coal power station

Many people here appear concerned that the site may be sold to the Chinese. It is currently owned by the renewable energy investment company Maoneng; Chinese.
I will leave them to ascertain their own racism quotient.
There are also quite a few comments by those believing the sale in administration means the project is non-viable. By a remarkable coincidence that appears to be the same number of people as those wishing to display their ignorance of project financing. You figure it out.

Capital Retro9:47 am 12 May 22

Your expertise of project financing will be cold comfort to any unsecured creditors.

Capital Retro9:12 am 11 May 22

The situation that has arisen could be part of a wider problem that has developed in Australis with renewable energy expansion:

https://www.pv-magazine-australia.com/2020/08/26/john-laing-continues-to-bleed-red-ink-with-its-australian-solar-projects-stuck-in-the-slow-lane/

I agree that there are continuing issues with underinvestment in storage and transmission to manage renewables in the NEM in Australia. Good to see you catching up on information CR, although you might have attributed properly that paragraph you plagiarised from reneweconomy yesterday.
Nearly two years since the pv-mag article, John Laing retain both solar farms among their present count of infrastructure investments (2 solar among 19 total, mostly roads, trains and bridges). There are another 11 projects listed as divestments on their web site, including several wind farms.
John Laing are now privately owned by KKR so I am unable to get detail on their present financial affairs.

Capital Retro1:17 pm 11 May 22

Thanks for your expert remarks, phydeaux.

Renewable are sold as a magic bullet , it shows they aren’t mature enough yet we should have built coal power station to improve our economy situation and reinvested the money in nuclear. To many non engineers live a pipe dream of Renewables .

Frank Spencer9:42 pm 10 May 22

Hope the Chinese buy it. Would be a stable owner and would never have this problem again.

Nothing “stable” about the Chinese. I wouldn’t trust them at all.

HiddenDragon6:41 pm 10 May 22

Such an interesting case study, just as we are being told by federal Labor that charging ahead with renewables will be the silver bullet to reduce cost of living pressures and to power a renaissance in Australian manufacturing.

It’s a cash cow given the governments payments. Wish I could buy it

Capital Retro10:08 am 10 May 22

Mugga Lane’s contract was for a guaranteed price of $A178/MWh, which appears a huge number in the current environment where strike prices are expected to be less than one third of that.

What could have possibly gone wrong?

Capital Retro9:56 am 10 May 22

Mmm, trouble re-financing a solar farm? I thought lenders were shunning fossil fuel projects so what could possibly be wrong with a “clean-energy” solar farm?

Also, the fact that the sale is “expecting a “high level of international interest” does not confirm that “buyers are flocking”, either.

The way the global markets are at present there will be difficulty in funding anything to do with energy.

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