Corporate Renewable PPA Deal Tracker

Energetics is tracking the uptake of corporate renewable power purchase agreements (PPAs) in Australia. These long-term deals are being concluded by some of Australia’s largest energy users. A well-designed PPA has the potential to deliver multiple benefits: electricity cost reductions, the ability to hedge against energy market volatility, greater budget certainty and emissions reductions in keeping with a net zero or carbon neutrality commitment.

The market for renewable PPAs has grown rapidly in recent years from one deal concluded in 2016 (Victorian Government, own use of LGCs). Since 2017, corporate PPAs have supported projects with a combined capacity of more than 7,500MW, of which nearly 6,500MW enabled investment in new projects. After a subdued 2019, we now see 2020 breaking the Australian record for corporate PPA deal flow as measured against both metrics being tracked by Energetics:

  • generation capacity supported by PPAs (MW)[1]
  • annual output contracts (GWh).[2]

Furthermore, NSW and Queensland have overtaken Victoria, each accounting for 31% of renewable energy project capacity (about 2,400MW) supported by corporate PPAs since 2017. However, as illustrated in the 'Generation capacity of projects supported by PPA' figure, the most significant gains were made by Queensland in the last year. However, Victoria is not far behind benefiting from 29% of project capacity supported by corporate PPAs.

Generation capacity of projects supported by PPAs (MW)

Queensland is dominated by a few very large transactions, whereas the scale of projects supported in the 'Generation capacity of projects supported by PPA' figure above, as well as the size of the output contracted by individual organisations illustrated in the 'Size of contracts' figure below in NSW and Victoria are more varied. Clients supported by Energetics that to date have concluded transactions in 2020 include ALDI Stores, CSIRO, MREP 2.0 and Transurban. These clients jointly account for nearly 50% of the output contracted through PPAs in NSW and Victoria and approximately 25% of the national volume.

Size of contracts (estimated annual offtake – GWh)

Retailer-intermediated PPAs account for more than half the estimated volume of the output contracted in 2019 (54%) and 2020 (50% YTD), up from only 15% in 2017.

As at 24 October 2020, approximately 51% of the projects supported by total capacity (MW) are solar, 5% are a mix of wind and solar, and the remainder are wind projects. Furthermore, the resources and heavy industry sector and multi-sector buyers groups account for nearly half the annual output in GWh contracted under corporate PPAs.[3]

Contracts by technology type and industry

Footnotes

[1] This reflects the size of the utility scale project (larger than 10 MW) that has successfully incorporated corporate PPAs in their revenue strategies. For many this meant a number of separate transactions – often over an extended period of time. The year reflects the first transaction. For others, it was one big transaction with a single corporate or a buying group. Nonetheless, even if the PPA was for only part of the project capacity, the project often would not have secured financial close without the PPA

[2] This reflects the annual size of the offtake volume (larger than 10 GWh) an energy user contracted for in a single transaction, in the year the transaction was concluded or announced.

[3] Note that this is based on annual contracted volume and does not take account of PPA tenures which vary from 5 to 20 years.

Further insights

Energetics Exchange podcast episode 2 - COVID-19 and its impacts on Australia's renewable energy markets

 

Thought leadership articles

  • mrep2png
    Melbourne Renewable Energy Project 2.0 - Renewable PPA transaction advisor
    Issued: July 2020

    Energetics was engaged in 2019 to advise on electricity contracting options. We also supported the end to end PPA transaction process from engaging the market, drafting RFP documentation, providing technical and financial assessments of the diverse range of product offers from retailers, and supporting negotiations. The work to drive negotiations was undertaken with Norton Rose Fulbright to secure a shortlist of preferred suppliers to reduce the buying group’s risk exposure.

  • dexuspng
    Dexus - Supply-linked corporate renewable energy supply agreement advisors
    Issued: January 2020

    Energetics assessed the opportunity for cost and emissions reductions, and how best the deal could be structured to meet Dexus’ objectives. The overall value proposition for Dexus hinged on both the attractiveness of the power side of the proposed transaction and the supply of Large-scale generation certificates (LGCs).

  • nsw-guide-to-corporate-ppas-1
    Guide to corporate PPAs: unlocking the benefits and managing the risks
    Issued: November 2018

    While focussed on the corporate PPA opportunity in NSW, this newly launched guide is designed to bridge a knowledge gap in the market, as more and more large energy users seek to access the benefits that can be created with a comprehensive, risk managed deal. 

  • monashjpg
    Monash University - Commercial and technical advisor
    Issued: July 2018

    Energetics provided technical and commercial advice during the development of the corporate PPA’s business case, as well as during the due diligence stage of the Murra Warra Stage I transaction.

  • sydneymetropng
    Sydney Metro - Renewable PPA transaction advisor
    Issued: July 2018

    Energetics was involved throughout the process. From developing options, assisting the business case and writing the request for expression of interest, through to advising on the contract model’s development, pricing model design, drafting of commercial terms, industry consultation and assessment of responses. Energetics provided the in-depth understanding of electricity contracting and markets required by the Sydney Metro Authority to deliver the project.

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