A combination of factors has rendered Australia an attractive destination for utility-scale solar farms, and there are myriad ways developers can set up shop without jeopardising their bottom line due to the high local employment costs, writes Jan Rieche, Manager Renewable Energy and Engineering at Polyglot Group.
When Spanish renewable energy developers and engineering, procurement and construction management (EPCM) contractors Acciona, FRV, Abengoa and Elecnor came to Australia in the last 10 years, they were looking at a land of opportunity. However, not many wind and no large-scale solar farms had been built yet.
They quickly came to realise that aside from regulatory hurdles and political uncertainty, there was another hindrance looming – the high cost of qualified labour in Australia, coupled with often very remote project sites, which required companies to resort to a fly-in fly-out (FIFO) scenario.
Australia has one of the highest rates of employment costs in the world – the competition for qualified people with experience in renewable energy technology and electricity generation is fierce. This is before even considering if the talent resides in or is available to move to remote project locations.
However, with renewed optimism after the federal leadership change, a return to facts-based discussions rather than ideology, and the positive outcome of the COP21, many local and overseas developers from France, Germany and the US will start prospecting Australia for new opportunities again.
When it comes to delivering their projects, developers have several options to choose from:
Outsource work to a subcontractor – a good option for some packages of work that are “˜easily’ quantified and qualified. The downside here is that this often involves lengthy legal exchanges to determine the proper specifications.
Hire full-time employees – a good option when you have follow-up projects in the pipeline and want to keep key resources within the organisation. The drawback is that you have to look after all HR-related obligations, like determining the right Fair Work awards, pay, superannuation, taxes, insurance, HR liabilities, annual and sick leave, etc.
Employ contractors for the duration of the project – a good option to add expertise and the skills that you require precisely for the amount of time you need them. The disadvantage here is that you still have to look after most of the aforementioned HR obligations or pay a recruiter to look after them for you. Additionally, you will be tapping into the area of highly qualified, and therefore very expensive, “˜career contractors’.
Outsource the employment of your entire project workforce for the duration of the project – probably the best option if you want to concentrate on the project and have only limited resources in the country to look after the above obligations. This is also an ideal option if you need to ramp up quickly to start the project and if you are uncertain if you will have a follow-up project right away or if you will need all the resources on this project for your next one in the pipeline. The staff will still report directly to you, despite them having a contract with another legal entity, which takes the employment risk away from you. The downside here could be potential doubling up of existing resources within your organisation and – if not calculated correctly in the beginning – higher costs.
Depending on an EPCM contractor’s situation and experience, either one of the above or a mix of the options could work out best.
Polyglot’s work on Moree Solar Farm
We were recently hired by Greenlight Contractors (Elecnor) to support the development of their Moree Solar Farm, one of Australia’s biggest solar farms. Located in the central northern part of NSW, the farm will be one of the largest renewable energy projects in Australia, powering nearly 15,000 NSW homes. It is Australia’s biggest solar farm using tracking technology, therefore minimising the area covered and maximising energy output. The project, initially one of the solar flagship sites, was developed by FRV, who appointed Green Light Contractors as its main contractor.
Despite Elecnor having several thousand staff around the world, it only had a small set-up in Australia. After winning the EPCM contract for this solar farm, it had a few weeks to get boots on the ground and acquire a local workforce to add on to the expertise it was bringing in from projects overseas.
We managed the entire Australian workforce. This included both FIFO white-collar staff (HSE supervisors as well as commissioning, electrical, civil and mechanical engineers) and local blue-collar staff (warehousing, transport, security, cleaning, etc.). Finding these employees, managing the HR administration process – including pay, insurances, taxes, performance issues – as well as taking over the employment risk enabled the contractor to concentrate on the challenging project on hand.
However, attracting senior people for a set amount of time – projects can vary from just six months up to three years – can be challenging. On some projects, Polyglot is only given between two and four weeks’ notice to put together the initial project team. These projects are often developed in small towns where affordable accommodation can become an issue, as well as the cost of travel to and from the site.
As with most other construction projects, people employed were classified under several different Fair Work Awards, which mandated different pay schedules for salary, superannuation, casual loading etc.
While some people were finishing up on the project, others joined the project to contribute to its success with their specific skillset. All this culminated in detailed administration work. However, in the end, we helped Green Light Contractors deliver the project in a timely fashion. At the time of writing, commissioning of the Moree Project had just begun.
We are currently talking to several wind EPCM contractor to apply the same concept to upcoming projects.
Australia has great potential for large-scale renewable energy in the decade to come. The landscape for developing and delivering these projects is changing fast, which will put downward pressure on cost for contractors.
Considering various options on how to deploy their workforce before starting the project – or ideally at the tendering stage – will enable EPCM contractors to forecast their costs accurately, support their tendering process and ultimately deliver the holy grail: a project on time and on budget.