2020 is expected to be a record year for corporate renewable energy Power Purchase Agreements (PPAs) in Australia with governments and businesses investing $AU2.4 billion and buying over 1GW through the year.
The Business Renewable Centre Australia (BRC-A) latest annual State of the Market report says the recent growth of renewable PPAs in Australia is “one of the major changes to the market for large-scale renewable energy” in the country.
According to the BRC-A, since 2017 there have been 79 Corporate PPAs negotiated in Australia, contracting 3GW of renewable energy generation, with over half being negotiated with new solar and wind farms. It’s played a key role in packing up the slack created by the federal governments decision to not extend the renewable energy target.
The report identified over 1GW of renewable PPAs signed in 2020 as of the middle of November, led by state and local governments, and companies.
NSW still trails Victoria for corporate PPAs overall, but that may not last long considering how little Victoria signed during 2019-20 and how much New South Wales signed, and its plans to sign under its renewable transition roadmap (12GW by 2030). Queensland signed the second most amount of corporate PPAs in the 2019-20 financial year.
“Amidst the turbulence of Covid-19, it’s been a record year for Corporate PPAs which is an incredible result,” said Dr Chris Briggs, Technical Director of the BRC-A.
“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.”
Through PPAs, governments and businesses contract to buy electricity and/or green certificates from renewable energy projects at an agreed price. Other than securing renewable electricity supply, PPAs also serve as a way to hedge against electricity costs while also providing renewable energy projects with revenue certainty, which helps land cheaper finance.
“The development of the Corporate PPA market since 2016 has been extraordinary,” added Darren Miller, CEO of the Australian Renewable Energy Agency (ARENA), which supports the BRC-A.
“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.”
Data for the report was acquired through a survey of national buyers, developers, and consultants. Buyers with a combined load of between 400MW to 600MW replied to the survey saying they were currently pursuing corporate PPAs.