First Australian corporate bulk-buy to deliver new 80MW wind farm

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An 80MW wind farm to be built near Ararat after first-of-kind contract with powerful consortium of 14 universities, corporations and Councils.

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An 80MW wind farm is set to be built near Ararat, in regional Victoria, as the result of a first-of-its-kind renewables project developed by a powerful consortium of 14 of the state’s leading universities, cultural institutions, corporations and Councils.

The Melbourne Renewable Energy Project – which is led by the City of Melbourne and includes the University of Melbourne, RMIT, Federation Square, City of Port Phillip, City of Yarra, Moreland City Council, Bank Australia, Zoos Victoria, Citywide, National Australia Bank, Australia Post, Melbourne Convention and Exhibition Centre and NEXTDC – was formally launched on Thursday in Melbourne.

Underpinning the ground-breaking project is a custom designed group purchasing model, that contracts the 14 consortium members to buy a total of 88MWh, or one-third of the assumed output of the wind farm, at an undisclosed price.

The 39-turbine wind farm will be built by Pacific Hydro in the small agricultural town of Crowlands, north-east of Ararat.

Pac Hydro described the contract as “a new approach to power purchasing” that will allow the consortium members to take control of their power costs, cut their emissions, and directly support the decarbonisation of Australia’s power system.

The power generated by the wind farm will be supplied by Pac Hydro’s retail arm, Tango Energy, which will presumably sell the remainder of the wind farm’s output to the grid on a merchant basis, or contract with other buyers.

According to information provided to RE, a portion of the power prices will be fixed (tied to the cost of the wind farm) for the 10-year term of the contract (as is the LGC price) and a portion will be variable.

The variable component of the contracted price of power will be reset every two years in line with the market, a spokesperson said.

But one of the key successes of the project – and points of pride for its organisers – is the ability of it to be copied elsewhere in the country by other consortia.

“This model will be replicated all over Australia and internationally, where practical, by groups of cities, businesses, and community members,” said City of Melbourne deputy mayor, Arron Wood.

“We’re releasing a handbook that makes it easy to learn from our experience, improve on the approach and replicate it many times.

“This project adds to a growing number of organisations and governments going direct to market to purchase renewables, but never before has it been proven that such a large number of partners can come together and make it work.”

The project was first floated in November 2014, at which time it was almost certainly one of the first global examples of a group of large-scale energy users proposing to buy utility-scale renewable electricity through a group purchasing model.

Wood – who has been a passionate leader of the Melbourne Renewable Energy Project – said his elation over the launch of the wind farm, and the success of the funding model, has been tempered by an uneasy feeling of deja vu over federal energy and climate policy.

“It’s funny and disappointing that when we started the project, it was a time of extreme policy uncertainty,” Wood told Reneweconomy in an interview on Thursday. “The RET was under review, investment had fallen off the cliff as a result of the uncertainty, and the CEFC was on the chopping block.

“(Now), while we’re really excited and happy to see the leadership that’s been shown by the Victorian government… I almost feel a little bit like it’s back to the future with the uncertainty … with the NEG and the idea that it will take two years to come into fruition,” he said.

“I guess I’m a bit angry that we’re still waiting for that national policy certainty. …There’s only so much heavy lifting that local governments and corps can do.”

For its part, Pacific Hydro appears to agree.

“Initiatives such as the Melbourne Renewable Energy Project will be key in driving new renewable energy generation in Australia at a time of ongoing policy uncertainty,” the company’s CFO Rob Spurr said in a statement on Thursday.

For the City of Melbourne, the successful completion of the Crowlands wind farm – slated for mid-2019 – will see it 100 per cent powered by renewable energy, topping up Council’s previous efforts in energy efficiency and with the roll-out of rooftop solar on local government buildings.

“We’ve already reduced our operational costs by between $800,000 to $1 million in annual savings (on electricity),” Wood told RE, largely through the Council’s energy efficiency and solar projects.

But he said that to get the council over the line on its renewable energy target, it needed to aim higher.

“When we looked at our targets (25 per cent renewables by 2018) we realised, we are not going to get there unless we invest in large-scale renewables,” Wood said. “If we’re going to hit that RET and hit the emissions reduction, it’s going to need to be a group approach.”

Fortunately, and despite the policy uncertainty of the time, there was plenty of interest in the idea.

“There was a huge appetite for something like this to happen. (The other parties) were actually just looking for someone to lead the process,” Wood said.

“They’ve all got their own targets to meet. …This is corporate social responsibility writ large.”

And that much is evident on the MREP release:

“We take seriously our responsibility as a public-spirited and global university to lead debate and act on sustainability issues,” said University of Melbourne CFO Allan Tait.

“The Project signals the University’s commitment to sustainability across all of its core activities, underpinned by our Sustainability Charter and Sustainability Plan to 2020. The University continues to implement on-campus projects to reduce energy demand and develop renewable energy capacity on site.”

For RMIT, the project will help it meet its emissions reduction goals four years ahead of schedule; while NAB says it will contribute to the bank’s commitment to source 50 per cent of its Australian energy from renewable sources, by 2025.

The City of Yarra, meanwhile, says it is committing to sourcing 100 per cent of Council’s electricity through the project.

For Wood, however, the true benefits of the MREP are only just beginning.

“The true measure on this project will be the replication model that we’ve designed,” he told RE. “I feel like this is going to open the floodgates – and that’s why there’s a real need to get our national policy worked out.

“I’ve already had conversations with sustainability Victoria …and (state renewable energy advocate) Simon Corbell about the Victorian government running future rounds of the Melbourne Renewable Energy Project,” he said.

“It’s a great outcome… to have such a tangible outcome as a result — to be able to say, we did this. We didn’t wait for the policy certainty, we rolled up our sleeves and got it done.”

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1 Comment
  1. johannes 12 months ago

    Nice one MREP – an excellent example for others to follow. Seems like one of the best responses to the national energy policy vacuum is such partnerships involving state, local and private organisations. It’s a strange irony that the “global domination” theory held by some of the most rabid climate change denialists can be effectively countered by the aggregate efforts of a multitude of smaller organisations.

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