Trial over Thurrock’s solar investment concludes

A dispute over solar farms backed with £145m in public money has concluded at the High Court this week.

The case revolves around a deal for 19 solar farms between Toucan Energy Holdings, owned by Liam Kavanagh, and Wirsol, an energy business. The farms were bought by Toucan in 2017 with money provided by Thurrock and Warrington councils.

Toucan, the claimant, alleges 15 of the sites were “flawed assets”, “blighted by defects” that reduced their ability to operate at full capacity. They have claimed damages relating to subsequent loss of income.

While Wirsol, the defendant, agreed there were issues with a small number of sites, including equipment that was deficient and needed to be replaced, it argued the amount needed to remedy the defects was limited and they had caused no significant loss of income. Wirsol also claimed it was due an extra £6.4m from the deal, which Toucan disputed and refused to pay.

Toucan also sought to reclaim the costs of refinancing a bank loan originally taken out by Wirsol to pay for the construction of the sites. The company says that in August 2018 it found itself with two weeks to pay off the £78m balance and had no choice but to turn to an existing investor – Thurrock council in Essex – for the money. Wirsol said the alleged defects had nothing to do with the refinancing and, as such, the attempt to claim costs from them was “hopeless”.

It was alleged in court that in seeking that money from Thurrock – in the form of an £85m bond – Kavanagh issued a bond prospectus that failed to mention the defects or a £5m arrangement fee paid to another of his companies, Rockfire Capital. Kavanagh denied any wrongdoing. Colin Johnson, a solar valuation expert called by Toucan, told the court Kavanagh had earned the £5m for being able to secure the money his company needed.

Proceedings concluded at the high court on Thursday and Mr Justice Henshaw reserved judgment, which lawyers say could take up to six months to be delivered.

Thurrock council invested £145m in total in the 19 sites, funded (as with all the council’s £815m investments in renewable energy schemes) by loans from other local authorities. The deal was arranged behind closed doors by the council’s finance director, Sean Clark.

The council previously told the Bureau it had “never knowingly made a payment of ‘commission’” but that it did accept there were legal and other costs connected to preparing bonds. It said the alleged defects with the sites had not impacted the performance of the bond, which was purchased after a due diligence process.

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Header image: Swindon Solar Park, another of Thurrock council's solar investments through Rockfire Capital