The Reserve Bank of Australia says the cost of GreenPower are too high to justify its promised switch to renewables, and has instead signed up for a new $10.9 million electricity supply contract with Trevor St Baker’s Delta Electricity, the owners of the Vales Point coal generator in NSW. .
The RBA says it will purchase some amount of renewable electricity through its supply contract with Delta – an amount a Reserve Bank spokesperson told RenewEconomy was ‘not insignificant’ – but refused to disclose the exact proportion, saying the information was commercial in confidence.
“The specific contract details are confidential, including what portion of the supply will be renewable,” the RBA spokesperson said in an emailed statement.
As reported by RenewEconomy in August, the Reserve Bank had initially sought to purchase just 10 per cent GreenPower under a tender to supply electricity to the bank’s locations.
Following RenewEconomy’s report, just a day later the Reserve Bank issued an updated tender request which said the bank would consider proposals for purchasing up to 100 per cent renewable electricity, focusing on GreenPower.
But in the same week that a major new report from the CSIRO identified wind and solar as by far the cheapest new energy supply options, even when counting the cost of storage and transmission, and when other corporates like Investa and Amazon announced 100 per cent renewable energy supply deals that will both lower emissions and costs, the RBA suggested that the cost of GreenPower is too high.
“The tender reflected the Bank’s overall objective to reduce its carbon emissions. This includes a range of actions such as reducing our energy consumption, using on-site renewable energy generation and the use of accredited renewable energy such as GreenPower,” the RBA spokesperson said.
“The proportion of GreenPower that will be supplied initially is not insignificant, and is based on a balance between costs and emission reduction. GreenPower is currently considerably more expensive than non-renewable electricity, but as costs reduce over time the Bank will seek to increase the proportion.”
GreenPower is different to a direct purchase agreement (PPA) favoured by most corporates, because the cost of the “green” is usually added to the cost of wholesale electricity. Buying direct from the source, or their agent, is much cheaper. (See more below).
The RBA says it is planning to add rooftop solar to at least two of its facilities, including a 164kW system at offices in Sydney and a 1MW solar plant at Note Printing Australia facilities in Craigieburn, Victoria.
A number of large corporate energy users have recently announced commitments to purchase all of their electricity from renewable sources, including under initiatives like RE100.
All four of Australia’s big banks have signed up to the RE100 initiative, with the ANZ, Commonwealth, NAB and Westpac Banks all committing to source all of their electricity supply from renewables. Macquarie Group as also signed on to the RE100 program, with smaller independent bank Bank Australia becoming the first bank to fulfil the commitment through a supply deal with Pacific Hydro.
Many corporate renewable energy commitments ultimately allow businesses to reduce their energy costs, as well as their environmental footprint, with wind and solar now able to deliver cheaper supplies of electricity.
However, the GreenPower program that the RBA is seeking to use requires the surrender of renewable energy certificates. While this generally ensures GreenPower purchases leads to an increase in renewable energy generation, it does attract at a price premium.
The Reserve Bank has adopted an environmental statement that includes a commitment to increase its use of renewable energy and deputy governor of the Reserve Bank of Australia, Guy Debelle, has been outspoken about the need for the Australian corporate sector to integrate climate change into risk planning.
Delta Electricity currently operates just one power station, the Vales Point coal-fired power station. Vales Point, which is already more than 50 years old, is scheduled to close in 2029, and the ageing power station has faced a number of complaints about pollution and contamination. The revelation that the Reserve Bank would purchase power from Delta Electricity prompted calls for an explanation from the Australian Greens.
Delta is looking to develop a 55MW solar farm at the site of a former ash dam at the Vales Point power station, and the company’s contract with the Reserve Bank is set to include the sale of GreenPower will see renewable energy certificates produced by a renewable energy project surrendered on behalf of the bank.