Lawsuits, unpaid bills cast shadow over large Minnesota solar energy project

Aurora, one of Minnesota's largest solar energy projects, has become a financial and legal morass.

Scores of subcontractors have filed a blizzard of claims, saying they were not paid for their work on the $290 million project that was completed last month. One of the attorneys involved estimated that at least $85 million is owed.

The subcontractors, which include several Minnesota firms, have been stiffed as Aurora's Italy-based owner and its Greek primary contractor duke it out over delays and cost overruns on the project.

"They have been unpaid for a long time, and quite frankly it's unexplainable," said Dean Thomson, an attorney whose law firm represents two larger subcontractors: Faith Technologies, a Menasha, Wis.-based electrical engineering firm, and Little Canada-based Frattalone Cos., which does civil construction work.

Aurora features solar panel arrays at 16 sites, many on the outskirts of the Twin Cities. Together, the solar sites can produce 100 megawatts of power, enough for about 17,000 homes.

Only one other solar project in Minnesota is in the same league: North Star, a 100-megawatt power plant on one huge site in Chisago County. North Star and Aurora both sell electricity to Xcel Energy.

Aurora is owned by Enel Green Power North America, an arm of Enel SpA, a Rome-based, multinational power company that in 2016 had revenue of $80 billion and net profits of $2.9 billion. As its prime contractor for Aurora, Enel hired Biosar America, an arm of Athens-based conglomerate Aktor S.A.

In February, Aurora Distributed Solar — an Enel affiliate — sued Aktor, saying the Greek company must make good on a guarantee of Biosar's work. Biosar failed to perform under the terms and conditions of its contract, Aurora claims in a lawsuit filed with the U.S. District Court for the Southern District of New York.

As early as July, Aurora sent Biosar a default notice claiming Biosar didn't comply with safety and environmental obligations under its contract, court documents say.

By the end of 2016, Biosar had stated it wouldn't be paying subcontractors on the Aurora project because it lacked money, Aurora says in its suit. So, Aurora says, Aktor must repay it for over $25 million in payments Aurora made directly to subcontractors who hadn't been paid by Biosar.

That includes $7.8 million to Faith Technologies and $11.9 million to Blattner Energy of Avon, Minn., one of the largest U.S. solar and wind power plant builders.

Aurora made those payments to "prevent further damages in connection with the project," court filings say. Despite the payments, both Faith and Blattner are still owed millions of dollars, and have filed liens on the project.

Aurora also claims Aktor must pay off liens filed by several subcontractors in Minnesota.

Enel Green Power North America said in a statement it "works to ensure the safety, well-being, and fairness of its employees and contractors at all of our projects."

Biosar's parent Aktor says in court filings that Aurora terminated Biosar after the "substantial completion" of 14 of the 16 solar energy sites. Aurora physically locked out Biosar from the project sites, calling local sheriffs' offices when Biosar employees tried to access them, Aktor claims.

Aktor argues that problems on the project were Aurora's fault. Aurora spread "chaos," Biosar claims in court documents. "The cost and schedule of [the project] were impacted by Aurora's interference in the design and construction process." In addition, flooding and unforeseen conditions at some of the solar sites led to delays, Aktor says.

In January, before it was sued by Aurora, Biosar started an arbitration proceeding against Aurora, claiming Aurora owes more than $55 million for work done by Biosar and its subcontractors. Aktor argues that Aurora cannot avoid arbitration by filing a lawsuit. A federal judge agreed with Aktor in June, staying the lawsuit pending the arbitration's outcome.

Regardless of who is to blame, Ron Rasley, general counsel for Blattner, said Aurora brought in his client to help fix a mess.

"We came in at the 11th hour," he said. "Enel contacted us and said, 'Would you have the ability to help in this situation?' We were told to finish some of these project [sites], and we paid all of our subcontractors and suppliers."

Among the claims are mechanics liens — which are security claims on properties hosting the 16 solar sites — filed in Minnesota state courts by at least 20 subcontractors on Aurora.

An Aurora affiliate is the major landowner of many of the solar sites, but independent land owners with a stake in some sites have also had liens filed against them.

There are so many liens filed in so many counties that they have been consolidated under one state court judge in Wright County — an unusual move.

Thomson, the attorney for Faith Technologies and Frattalone, said that with all the outstanding liens, the subcontractors are essentially propping up a project that is now producing electricity.

Enel "is profiting from the lien claimants' financing of the project while [Enel and Aktor] resolve their dispute," he said.

Enel and associated parties have proposed a $108 million "payment bond" to deal with the lien litigation in Minnesota, court records indicate. Normally, when liens reach the litigation stage, claimants ask a judge to foreclose on them — similar to a home mortgage.

With the bond, the court would determine if each lien claim is valid, then pay claims off from the bond, instead of foreclosing. The bond would appear to cover liens against solar site landowners who are independent of Aurora.

While the payment bond might be a less messy process than foreclosure, "we are stilling looking at eight to 15 months" before subcontractors get paid, said Rasley, Blattner's attorney.

Mike Hughlett • 612-673-7003