A record year for Corporate Renewable Power Purchase Agreements

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Published 03 Dec 2020

By Business Renewables Centre Australia

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December 3 2020, Sydney – The Business Renewable Centre Australia’s annual State of the Market report has found 2020 will be a record year for Corporate Renewable Power Purchase Agreements (Corporate PPAs) in Australia, with governments and businesses investing $2.4B and buying over 1,000 megawatts (MW) of renewable energy.

Under Corporate PPAs, governments and businesses agree to buy electricity and/or green certificates from renewable energy projects at a fixed price. For buyers, PPAs are a way of hedging electricity costs, reducing emissions and potentially achieving bill savings. For renewable energy projects, a PPA gives them revenue certainty to secure finance for construction.

“Amidst the turbulence of Covid-19, it’s been a record year for Corporate PPAs which is an incredible result. Along with the biggest Australian wind and solar PPAs signed by Queensland’s new public retailer CleanCo, corporate buyers and councils have kept renewable energy growing through Covid-19,” said Dr Chris Briggs, Technical Director of the BRC-A.

Darren Miller, ARENA, CEO, noted the growth and diversity of PPA buyers was testimony to the resilience of the Corporate PPA market in Australia.

“The development of the Corporate PPA market since 2016 has been extraordinary. In the past year, we have seen a growing range of organisations making deals from big corporates such as Aldi, Amazon and Shell through to smaller councils such as Hawkesbury City Council which is the sign of a healthy market. Corporate PPAs are now an established part of the market for renewable energy and playing an important role in clean energy transition,” said Mr Miller.

Data from a national survey of buyers, developers and consultants also found solid PPA demand from new buyers. Buyers with a combined load of 400-600 MW said they were currently pursuing Corporate PPAs and buyers with a combined load of 100-150 MW were interested in PPAs. Less than 30 per cent of developers and consultants had observed a reduction in demand for PPAs.

State of the Market also observed the leading role of governments in growing Corporate PPAs as retailer demand for renewable energy had fallen following the achievement of the national Renewable Energy Target.

“The return of government to the electricity market is not a return to centralised planning, but instead the development of new approaches to facilitating Corporate PPAs – either as a retailer like CleanCo in Queensland which is on-selling to corporates, aggregating buying groups like the City of Melbourne or an ‘anchor buyer’ like the Victorian Government’s proposal to join industrial buyers to the PPA they will be negotiating for their own usage. NSW will also be driving demand through auctions under the Electricity Infrastructure Strategy and Renewable Energy Zones,” said Dr Briggs.

“State Governments and councils are playing a leadership role in the growth of Corporate PPAs.”

Some of the other findings in the State of the Market Report included:

  • NSW was the leading state for Corporate PPAs in 2020
  • The national survey found price is the most important factor for buyers when selecting a PPA – but that community and social benefits such as local jobs and infrastructure are growing in importance for buyers (and more important than recognised by project developers)
  • The market has consolidated into two major segments – wholesale PPAs directly with projects for larger buyers and retail PPAs intermediated by a retailer for mid-sized buyers
  • Even as the market develops, Corporate PPAs remain challenging. One third of buyers completed a PPA in less than a year – but for almost half of buyers it took longer than 18 months.

Download report

The Business Renewables Centre Australia is the leading source of independent advice and information on Corporate Renewable PPAs. BRC-A is supported through funding by ARENA, the NSW, Victorian and Queensland Governments.

Media contact – Chris Briggs chris.briggs@uts.edu.au

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