Corporate PPAs take chunk out of Origin electricity sales

The shift to renewables by Australian businesses, both through self-generation and via Power Purchase Agreements, is starting to make its mark on big retailers, with Origin Energy revealing declines of up to 10 per cent in commercial electricity volumes.

In its quarterly results update published this week, Origin reported electricity business volumes down by 10 per cent compared the the March quarter, 5 per cent for the full year, and 9 per cent on June 2018 levels.

In brief note on the result, Origin said the year-on-year decline was “due to the loss of higher volume customers.”

Where these customers might have taken their business was not speculated upon by Origin, but it would not be unreasonable to surmise that the booming corporate PPA market in Australia might have something to do with it.

As we reported here in January, 2018 was a bumper year for PPAs, with Bloomberg New Energy Finance reporting a record 13.4GW worth of clean power contracted by companies around the globe.

That figure – at more than more than double the previous year’s record of 6.1GW – highlighted what Bloomberg NEF described as a “new normal” for businesses looking to secure both clean energy but also reliable and consistently cheap energy.

In the Asia-Pacific region – which signed a record 2GW worth of clean energy PPAs in 2018, more than the previous two years combined – Australia, along with India, was behind most of that number, the two countries signing up 700MW and 1.3GW, respectively.

But as the Clean Energy Council noted, the statistics only accounted for direct PPA agreements between electricity generators and big businesses, and did not include agreements where the power is generated, then fed into the grid and delivered to the client via a third party – thus affecting the true total of PPAs in Australia.

Certainly this has been a favoured approach of major corporations signing up to PPAs in Australia, including Telstra, Mars, CUB, Orora, Nectar Farms, Sun Metals, and of course Sanjeev Gupta’s GFG Alliance.

According to Energetics, since 2016 corporate PPAs have supported projects with a combined capacity of nearly 3700MW in Australia, of which about 3100MW enabled investment in new projects.

As at July 25 2019, around 50 per cent of the project capacity supported by corporate PPAs was solar, 9 per cent a mix of wind and solar, and the remainder wind.

Energetics also notes that Victorian projects have continued to dominate corporate PPA activity, with 46 per cent of project capacity (about 1700MW) supported by corporate PPAs.

Origin also noted in its quarterly results that in Energy Markets, electricity volumes had decreased 3 per cent in FY2019 “due to lower customer accounts and usage.”

Earlier this year, the utility noted that it had also seen a fall in retail electricity sales, “primarily due to lower usage from continued solar penetration and lower customer numbers.”