20 February 2024, Sydney – The Business Renewables Centre – Australia has published their annual 2023 State of the Corporate Power Purchase Agreement (PPA) Market Report earlier this month. The annual report provides an in-depth analysis of the renewable energy sector in Australia and serves as an invaluable resource for industry stakeholders, offering insights into emerging trends, behaviours, and developments within the corporate PPA market.

In 2023, Corporate Renewable Power Purchase Agreements (Corporate PPAs) experienced another remarkable year, setting a new record with over 1,700 MW negotiated. This marked the second consecutive year of increased deal volumes, bringing the cumulative total since 2017 to 165 Corporate PPAs contracting over 7.4 GW of renewable energy generation.

Despite a challenging market landscape characterised by a slowdown in new renewable energy projects, the report identifies a sellers’ market where demand for PPAs outpaced supply. High-profile corporations such as BHP, Ikea, Telstra, Woolworths, NBN, and Lion Brewery have played a significant role by signing multiple PPAs.

Queensland has emerged as the leading state for Corporate PPAs, surpassing New South Wales in both 2022 and 2023. State utilities in Queensland have played a pivotal role in signing PPAs with wind and solar farms, subsequently on-selling through retail PPAs to buyers.

The report highlights continuity in the drivers and barriers influencing PPA buyers over the past four years. Sustainability targets consistently drive two-thirds of buyers to engage in PPAs, with a notable shift towards larger deals (>100 MW) observed in 2023.

A modest increase in PPAs involving new projects was observed, accounting for 28% of deal volumes in 2023. The market displayed an even split between wholesale and retail PPAs, with around 40% of deals and capacity negotiated through Corporate PPAs classified as wholesale.

The report delves into the dynamics of Large Generation Certificates (LGCs), providing insights into their prices, buyer strategies, and uncertainties beyond 2030. While most buyers retire LGCs, a significant minority opts to sell them until required to meet organisational targets.

A novel aspect of the 2023 report is the exploration of Power Purchase Agreements involving battery storage and hydrogen. Although still uncommon, the inclusion of ‘firming’ components within PPAs suggests a potential shift, particularly for larger industrial buyers.

The report also examines what’s next Corporate PPAs under new policy frameworks. The expansion of the Capacity Investment Scheme (CIS) by the Federal Government introduces competitive tenders, reshaping the dynamics of Corporate PPAs. Underlying demand driven by emissions reduction, ESG considerations, and reputational factors will sustain the market.

For a detailed analysis of the findings and to access the complete report, please visit the Business Renewables Centre Australia’s official website.