While late to the party in the adoption of solar Corporate Power Purchase Agreements (PPAs), Australia is proving to be a leader in their adoption. Facilitating this has been a growing list of retailers helping offtakers structure deals allowing interested businesses to navigate the risks and stay ahead of shifting market and legislative dynamics.
Jonathan Prendergast, Technical Director at Business Renewables Centre – Australia (BRC-A) says that retailers playing a role in such deals have been Origin Energy, Flow Power, Infigen Energy, Red Energy (Snowy Hydro), Engie/Simply Energy, Renewable Energy Hub/ERM Power, and Diamond Energy.
Corporate PPAs have had a strong start in 2020, with four deals announced already, and several more known to be in the works.
Predergast notes that some organisations lack the capability to enter into more complex PPAs directly with wind and solar projects or are not large enough to play a meaningful role in financing a new utility scale PV project. In order to overcome this challenge, retailers have offered long-term retail contracts that include renewable generation.
Corporate PPAs are long term contracts for electricity and/or green certificates from large scale wind and solar farms, either directly with the project or a retailer, which signs the PPA. In Australia, many leading ‘first mover’organisations have realised financial benefits and delivered on renewable energy and carbon emission reduction targets via corporate PPAs.
According to Prendergast, companies sign up corporate PPAs for two major reasons: to become more proactive in managing their energy market risk as energy costs have increased significantly in recent years; and to take advantage of falling solar LCOE.
For many companies, the benefits of signing a PPA in 2020 outweigh the costs – with the benefits being both financial and from a sustainability standpoint.
Recent notable corporate PPAs signed in Australia include:
- Telstra’s PPA with the 67 MW Emerald Solar farm in Queensland
- MREP (Melbourne Renewable Energy Project) – City of Melbourne led group Retail PPA including 13 buyer organisations – with Pacific Hydro’s Crowlands Wind Farm and retailer Tango
- Mars PPA with 200 MW Kiamal Solar Farm (Vic) to become 100% renewable
- Bluescope Steel PPA with ESCO Pacific’s 130 MW Finely Solar Farm
In Australia, corporate PPAs took off between two-to-five years after other international markets, but since has become a hub of innovation in the space.
BRC-A collates a deal tracker, which collates new corporate renewable energy contracts as they are announced.
Prendergast elaborates that a key challenge for BRC-A buyer members is navigating procurement, negotiation and internal approval of PPAs, which can take more than 12 months. During such time frames, as the electricity market is going through such substantial policy and market change, it requires an agile approach and delicate internal stakeholder management.
BRCA will soon release its latest guide for mid-sized buyers, which includes guidance on how to choose the best option and an overview of retail options and offerings in the market.