New home buyers in WA offered “game-changing” solar PPA

One Step Off The Grid

Buyers of new-build houses and apartments at a property development in Perth’s northern suburbs are being offered an innovative solar power purchase agreement that promises to cut their daytime power costs by 40 per cent.

The residential solar scheme, a first of its kind for Western Australia, is being trialled at Yolk Property Group’s Amble Estate in Girrawheen – a mix of 129 “affordable and highly sustainable” houses, apartments and townhouses.

Designed in conjunction with solar installer and emerging electricity retailer Infinite Energy, the deal offers home buyers who opt in to the “sustainable living package” a rooftop solar system of between around 3.8 – 4.8kW, installed at no upfront cost.

Instead, the household enters into a 10-year solar PPA direct with Infinite Energy, giving that company ownership and maintenance responsibilities for the solar system for the term of the contract.

In return, the home owner gets access to daytime solar power at a guaranteed discounted rate of net 40 per cent less than the A1 grid tariff offered by WA government-owned retailer, Synergy.

Any power consumed from the grid – such as overnight – will still be supplied via Synergy, and the household will be billed separately for that, minus credits for exported energy.

At the end of the 10-year contract term, ownership of the solar system can be transferred to the homeowner for as little as $1.00, or removed if it is no longer wanted by them.

The idea of offering new home-owners a sort of solar PPA – although a first for WA houesholds – has been emerging in other parts of Australia as a way of boosting solar uptake, particularly among new home builders and low-income households.

That is, people who have already blown their budget on a new home, and found that adding solar is just a bridge too far; or those families who will never have the money or the access to finance to stump up for a rooftop PV system.

As we reported here, a similar scheme is currently being offered by solar marketplace ShineHub, giving existing households the opportunity to install between 3-10kW of rooftop solar and up to 22.8kWh of battery storage for no upfront cost.

In that case the contract is for 20 years, with the promise of bill savings of between 14 per cent (in Victoria) up to 50 per cent (in South Australia), and the option to buy the system out at any point along the way (or at the end of the contract, for $1).

But like the deal with Infinite Energy, it removes all risk for the consumer for the period of the contract – not only in terms of the performance of the rooftop solar system, but in terms of its output; the amount the homes pay for the solar is linked directly to how much they consume.

If solar power is not generated – on a cloudy day, for example – they are not charged for it. Or if it is not consumed for any reason, the household would be charged the same as they are paid by Synergy for power exported to the grid.

But perhaps most importantly, the WA scheme – which also has the backing of WA Department of Communities and Ventura Home Group – guarantees participating households a price for solar that will stay at a 40 per cent discount to the standard Synergy tariff for a decade.

That’s a major selling point in WA, which like the rest of the country, has suffered through some of the highest energy generation and delivery costs in the world.

But both Yolk Property Group, which has built up an impressive portfolio of green and sustainable housing developments, and Infinite Energy are keen to stress that this is not about free, or no-cost solar.

“This is not a marketing gimmick but a considered long-term solution to address rising household costs associated with the volatile power market,” said Yolk Property director Tao Bourton.

“Australians pay the highest rates for residential electricity in the world and this aims to remedy that with a model that can be rolled out nationally.

“The PPA allows residents to take advantage of significant savings on their solar electricity for an entire decade; after that, residents can take ownership of the solar equipment to enjoy free solar power for the life of the equipment, which is over 20 years, delivering cost savings to two generations,” he said.

“There are some PPAs being marketed out there as a ‘free system’,” Infinite Energy managing director Aidan Jenkins told One Step.

“It’s not free. It’s a 10-year contract, and over that 10 years, (Infinite Energy) hopes to make enough to cover the cost of capital and then make a small margin on the top as well.”

But it is a way for more households in sunny WA to install solar at no up-front cost, and with minimal risk.

“By offering home buyers this solar energy package, we see this project as leading the way in combining affordable home purchase with improved affordability of living while also allowing savvy purchasers to reduce their impact on the environment,” said the Department of Communities Assistant Director General of Commercial Operations, Greg Cash.

For Infinite Energy, which currently retails to businesses only in WA, schemes like that being offered alongside Yolk Property Group might also give the company a foothold in the residential market, for if and when WA households are allowed to choose their retailer.

As it stands, the state’s retail market remains a monopoly held by the government-owned Synergy, despite years of talk of opening it up to competition.

In the event that this happens, Infinite has said it plans to offer WA households “a suite of innovate new tariff options,” as it currently does for businesses in the state.

“We’d love to be able to offer a complete (solar PPA) solution for the residential market (in WA), but we don’t expect that’s going to be able to happen for at least a couple of years,” Jenkins told One Step on Monday.

As it is, the WA state government only recently introduced an electricity retail exemption for solar PPAs, for which Infinite Energy successfully qualified, allowing them to embark on this residential solar PPA experiment.

But both Yolk Property Group and Infinite Energy believe the trial could be game-changing, with or without changes to the retail market.

“This solution …paves the way for solar PPAs to become the norm for millions of homes across the country, delivering cheaper and cleaner electricity, including to those that do not have the surplus cash to purchase a solar system,” Jenkins said on Monday.

As for battery storage, that will be an option – the systems are being made battery ready. But as Jenkins notes, the design of the solar PPA already solves the biggest issue that batteries tend to address – what to do with excess generation.

“Under this PPA, we’re saying: we’ll only charge you what your retailer will give you for this energy. So you don’t really need a battery.

“We’ve got some real learnings we’re going to get out of this,” Jenkins added in comments to One Step. “Particularly around how people will go getting two energy bills. We’ve got some education to do on that.

“But it’s been really great to partner with (Yolk),” Jenkins added. “They’re definitely walking the walk on sustainable property development,” he said.

“This could be an absolute game changer – if all developments in Australia rolled it out, the reduction of carbon emissions would be immense,” said Bourton.

“It would help Australia become a world-leader in the up-take of renewable energy.

“As with any untrialled new initiative it is not without risk, but we’re committed to pushing the boundaries of green development to find ways to make sustainability affordable and attractive for developers, government and purchasers.”

This article was originally published on RenewEconomy’s sister site, One Step Off The Grid, which focuses on customer experience with distributed generation. To sign up to One Step’s free weekly newsletter, please click here.