Landmark PPA inked through $700 million program to source 500 GWh per year

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Investment Fund Managers (IFM) Investors and Queensland Investment Corporation (QIC) have signed a third round of deals for their $700 million (USD 466 million) Australian Infrastructure Renewable Energy Program (AIREP), to facilitate the supply of over 500 GWh of renewable energy per year.

The Stage 3 group of assets surpasses Stage 1 of the AIREP program, as the largest contracted load (in aggregate), largest multi-asset, multi-state Power Purchase Agreement (PPA) program in Australia.

IFM Investors Head of Infrastructure Australia Michael Hanna said the significant renewable energy program marks an important step for IFM’s assets and their own commitment to target net zero emissions.

“Importantly, it provides a blueprint to help more infrastructure assets switch to renewable energy and accelerate the sector’s emission reduction efforts,” he said.

The program, led by IFM Investors and QIC involves helping to make offers by energy retailers and generators to supply renewable energy to the participating assets. The assets can then elect at their discretion to enter into a power purchase agreement (PPA) with the supplier.

The energy suppliers for Stage 3 are Spain-headquartered clean energy developer Iberdrola Australia and Australian-owned clean energy developer Squadron Energy.

The Port of Melbourne is one of seven major assets joining IFM and QIC’s $700 million renewable energy infrastructure program.

Image: Queensland Investment Corporation

Australian electricity gentailer Origin Energy and Queensland government-owned energy solutions company Stanwell joined the program to supply its Stage 1 and 2 assets.

QIC Head of Global Infrastructure Ross Israel said the renewable energy program helps contribute to the net zero ambitions of some of Australia’s most significant infrastructure assets, while also reducing their own assets’ exposure to energy market volatility and delivering cost-savings through renewable energy.

“The renewable PPA program is aligned to QIC’s decarbonisation investment thematic, where private capital will continue to play a critical role in funding pathways to achieve net zero targets alongside governments,” he said.

“This thematic has seen us grow our infrastructure platform to include some $9.5 billion in investments supporting the transition to a low carbon economy, as we seek to mitigate the risks of climate change on our investors’ portfolio.”

Stage 3 assets include Sydney Airport, the Port of Melbourne, oil and gas company Lochard Energy Group, private healthcare provider Nexus Hospitals, healthcare company Healius Limited and the IFM Investors 15.1% owned, Adelaide Airport.

Stage 3 also expands beyond infrastructure to include a majority owned by IFM, health service PRP Diagnostic Imaging.

By 2025, the entire three-stage program is expected to save around 260,000 tonnes of CO2 annually and is estimated to a carbon footprint reduction equal to every home in a regional town the size of Ballarat in Victoria, or Toowoomba in Queensland.

Launched in March 2022, Stage 1 of the program was completed with contracts signed for the delivery of 132 GWh of renewable energy per annum for seven critical infrastructure assets in New South Wales and Victoria.

These included NSW Ports, Nexus Hospitals, NorthWestern Roads Group’s WestLink M7, Transurban’s CityLink, and assets which IFM has a respective ownership stake in, Melbourne Airport (25.2%), Southern Cross Station (100%)  and electricity distribution company, Ausgrid (25.2%).

In November 2022, the 20% IFM-owned Brisbane Airport signed on for Stage 2 of the program.

IFM says six participating assets from Stage 1 and 2, have progressed towards their net zero targets through a combination of participation in the program, as well as other sustainability initiatives such as constructing behind the meter solar farms, installing energy efficient lighting, and using electric vehicles.

In December 2023 IFM and other super funds representing around $1 trillion of industry super capital, released, Super-powering the energy transition: A policy blueprint to facilitate superannuation investment, outlining recommendations to federal and state governments on policy solutions to help drive greater investment into Australia’s energy transition.

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