Corporate renewable PPA deal tracker

Energetics is tracking the progress of corporate renewable power purchase agreements (PPAs). 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. For the most complete view of this market we track the following:

Size of generation capacity supported by PPAs (MW): This reflects the size of the utility scale project (larger than 10 megawatts (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.
Size of the contracts secured (GWh): This reflects the annual size of the offtake volume (larger than 10 gigawatt hours (GWh)) an energy user contracted for in a single transaction, in the year the transaction was concluded or announced.

Generation capacity of projects supported by PPAs (MW)

The market has grown rapidly in recent years from only a single deal concluded in 2016 (Victorian Government, own use of LGCs). Since then, corporate PPAs have supported projects with a combined capacity of nearly 5400MW, of which about 4000MW enabled investment in new projects.

As at 26 August 2020, approximately 53% of the projects by total capacity is solar, 7% a mix of wind and solar, with the remainder wind. Whilst Victorian projects continue to dominate, accounting for 32% of project capacity (about 1660MW) supported by corporate PPAs since 2016, NSW energy users have contracted for a larger volume of output than other states in 2018 and 2019 as illustrated below.

Size of contracts (estimated annual offtake – GWh)

2017 was dominated by a handful of large transactions by early movers, with the average transaction size approximately 250GWh pa. In 2018 the average size dropped off markedly to around 100GWh. By 2019 it was 80GWh pa, due to a large number of sub-50GWh transactions intermediated by retailers. In fact, in 2019 retail-intermediated PPAs accounted for 54% of the volume contracted in GWh, compared to 15% in 2017.

Further insights

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

Featuring: Anita Stadler, Associate and Mark Asbjerg, Senior Manager

Our host: Andrew Tipping, General Manager, Clients and Business Development

Insights

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.
- 20200701 - Melbourne Renewable Energy Project 2.0.pdf
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).
- 20200101 - Dexus.pdf
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.
- 20181010 - NSW Guide to Corporate Power Purchase.pdf
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.
- Energetics - Commercial and technical advice on leading corporate PPA deal for Monash University (July 2018).pdf (1)
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.
- 20180701 - Sydney Metro.pdf