A South Australian electricity retailer start-up has turned to renewable energy supplies in an effort to shield customers from ongoing market disruption, while rewarding them for using power during periods when wholesale power prices are cheap.
A relative newcomer to the electricity retailing space, iO Energy has struck an innovative power purchase agreement with bio-power company LMS Energy.
Under the agreement, power will be offered to iO Energy’s South Australian customers at prices that are lower during day-time hours, reflecting the lower prices that generally prevail on the broader wholesale market.
The retailer currently only operates in South Australia, where the high growth in rooftop solar uptake has contributed to the intra-day variability in wholesale electricity prices that iO Energy has sought to tap into.
The emerging energy market dynamics has allowed the company to tap into a new customer base of households willing to shift their energy consumption, including households with energy storage but without rooftop solar.
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The innovative power purchase agreement will see the company purchase renewable electricity from LMS Energy, Australia’s largest operator of landfill gas fuelled generators, along with a range of utility scale solar projects.
That power purchase agreement has similarly been structured to offset lower wholesale prices during daytime hours, discounted by as much as 80 per cent compared to prices paid during the peak early morning and evening periods.
For example, the ‘Lightning’ plan currently being offered by iO Energy includes an electricity tariff of just 7 cents per kWh between 10 am and 3pm – when solar output is highest – but this is counterbalanced with a 40 cent per kWh between 5pm and 9pm.
iO Energy CEO Rob Morris said the power purchase agreement struck with LMS Energy should help it continue to shield its customers from higher electricity prices, despite the market upheaval that seen a growing number of smaller retailers collapse.
“Over the last month the crisis in Australia’s energy market has proven the current model is broken. Many retailers have been unwilling or unable to contract sufficient energy for their customers,” Morris said.
“We use machine learning to forecast our customer load, and then contract renewable generation to match our needs. This keeps our costs lower and, and we pass the savings through to our customers.”
iO Energy says the deal should allow the company to offer some of the cheapest electricity prices available in Australia, while enabling LMS Energy to expand its project portfolio.
LMS Energy chief commercial officer James McLeay said the company’s fleet of landfill gas generators were able to contribute to effort to cut emissions from the waste sector, destroying methane that is otherwise a potent greenhouse gas.
“LMS Energy is Australia’s most experienced bioenergy from waste company, with projects generating enough renewable energy to power 95,000 homes each day while abating more than four million tonnes of carbon from the Earth’s atmosphere each year,” McLeay said.
“We’re proud to be partnering with another South Australian company in an agreement that will not only benefit their customers but will support us to continue capturing and destroying methane at landfills – which is better for the planet and better for our future generations.”
