PacHydro to take on energy retailers at their own game | RenewEconomy

PacHydro to take on energy retailers at their own game

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PacHydro establishes a green energy retailer to bypass the influence of the big three utilities. The first priority will be to write a PPA for its Solar Flagships proposal, as Acciona replaces BP Solar in the Moree Solar consortium.

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Pacific Hydro, the largest independent renewable energy developer in Australia, is to establish its own energy retailing group in a bid to break the dominance of the the big-three energy utilities, which it says have been an impediment to the development of renewables in the country.

The decision was announced as the Moree Solar Farm resubmitted its tender for the Solar Flagships program. The tender was reopened after Moree Solar, which included PacHydro, Spanish group FRV and BP Solar, failed to gain a power purchase agreement with any of the big three utilities, and therefore could not meet a financing deadline.

The Moree Solar consortium has now been recast, with BP officially leaving after announcing its withdrawal from the global solar business. BP will be replaced by Spanish renewables giant Acciona, which will operate EPC (engineering, procurement and construction) contract, but no equity stake.

The critical component, however, is PacHydro’s decision to establish its own retail energy licence, and to sign a PPA for the $930 million, 150MW project, in effect bypassing the three utilities that dominate the market – Origin Energy, AGL Energy, and TRUenergy.

Both AGL Energy and TRUenergy are involved in rival consortium to the Moree Solar project, and Origin Energy is said to have rejected a PPA with Moree Solar in the final stages of negotiation.

PacHydro general manager Lane Crockett said the Australian energy market was dominated by a few very large vertically integrated entities, “who are not only our potential customers but also competing for funding under the solar flagships program.”

“It is not unreasonable to expect that this conflict will continue to occur in the future, which requires independent power producers like ourselves to continually evolve and adapt.”

Crockett said the retail arm – which is yet to be named – could play a critical role in the development of the company’s wind projects, and even geothermal. He says it is a logical step, because the company already has around half of its wind farm portfolio operating in the “merchant” market, and yields from commercial customers could be higher.

Hardly any PPAs have been written in the last few years in Australia, effectively bringing the large scale renewables industry to a halt. The utilities have blamed the surplus in renewable energy certificates, but renewable energy developers blame them for effectively blocking developments.

Crocket says there has never been a better time to write PPAs, because wind turbine prices are low, the Australian dollar is high and some developers are desperate to conclude agreements to get meet planning approvals. Pacific Hydro, which has 340MW of wind and hydro plant in operation in Australia, and about 160MW of “advanced” wind projects, along with the Moree Solar proposals and some early stage geothermal projects.

The issue about the dominance of the energy retailers was raised in Canberra recently during a Senate estimates hearing. Drew Clarke, the secretary of the Department of Resources and Energy, said the government was monitoring the issue.

All four consortium competing for the retendered solar PV portion of the flagships program said they would resubmit their bids by the close of business on Friday, although they face a lengthy wait for the outcome.

Moree and the other contenders are all expected to resubmit offers with much reduced costs (thanks to the slump in panel prices in the last 18 months).

AGL and TRUenergy have both linked up in separate proposals with US thin film solar giant First Solar, and a fourth tender comes from wind farm developer Infigen Energy and Chinese PV module supplier Suntech.

Although the tenderers have had little time to resubmit their offers, it is believed that all had kept their bid teams running in the past couple of months in anticipation that a PPA would have been difficult to achieve in the current energy market.

The big question remains how DRET intends to handle the tender from here on in. The two questions relate to cost, and the ability to finance it. AGL and TRUenergy would have an advantage because they can write their own PPAs, but Moree may have found a solution to its problem.

Questions have also been asked about the length of time DRET will take in analysising the new bids, suggesting that the new winner may not be announced until the end of june. Given that the technical requirements of the bids have already been reviewed, most consortium think this time is excessive to assess the new costs. Some believe that DRET may use that time to quietly advise a winner, and ensure that a PPA and financing is in place at the time of a public announcement, to avoid further embarrassment and delays.

 

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5 Comments
  1. Daniel Magasanik 8 years ago

    I wish PacHydro success. The key will be the successful establishment and management of its own retail market.

  2. Rohan Wilson 8 years ago

    Good move Pac Hydro – and I am sure the good folk of Moree would be supportive .It has to be a serious attempt not just a ‘ASX saber rattle’ as we witnessed with Neighbourhood Energy and CBD Energy.

  3. Matthew Wright 8 years ago

    If they get it right, as in real zero emissions generation is backed, then they will get a massive movement of people on the ground supporting them to help with signups.

  4. Chris Fraser 8 years ago

    Well, Pacific Hydro has no coal or gas generators. Hmmm, tick. I see they also have the scope for making agreements for supply to green businesses. Tick ! In that case, would there be any objection to PH making agreements with householders to go 100% renewable ? Ok, so they would need a few households to get a PPA up, but i’m interested. Assuming there could be a similar agreement worked out with network operators, maybe they could avoid retail layers completely.

  5. Stu 8 years ago

    Question – could PH use their retail license to supply electricity to members of local communities near their wind farm developments. As background, Infigen are in the process of obtaining a retail license and they are supporting the setup of local commuity co-ops at Flyers Creek (NSW) and Cherry Tree (VIC). Co-op members would be able to receive distributions and/or electricity direct from the wind farm that they are shareholders in.

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