Sign up, save money: Councils and business given tools to negotiate contracts in renewable zones

The NSW government agency EnergyCo is trying to get more councils and businesses off coal power and into funding renewables, with the launch of a new education campaign targeting three key renewable energy zones (REZ).

The goal of the program is to advise councils and businesses on how to secure off take deals directly with wind and solar projects, helping to deliver savings and – most likely – smoothing the way for new projects to be built in the local region.

Information sessions about how to negotiate a power purchase agreement (PPA) have already kicked off in the Central-West Orana REZ, the first of the five proposed REZs to get planning approval, with sessions in the Hunter-Central Coast and New England REZs coming this year.

The idea is to help bigger energy users save money and lock in price stability, but also offer a way to support renewables projects that provide strong community and environmental benefits, says EnergyCo community benefits and regional development director Alexandra Hall.

“They’re good for these organisations, they’re good for local employment and investment, and they’re good for the environment,” she says. 

They are also good for shifting large energy users away from coal and providing more long term customers who can provide offtake contracts that renewable energy developers can take to the bank.

Wholesale versus retail

The educational sessions will be run by the Business Renewables Centre Australia (BRC-A) which will focus on two types of PPAs: wholesale contracts for difference and retailer integrated versions. 

Contracts for difference expose the buyer to the wholesale market and are for users of 70 gigawatt hours (GWh) of electricity annually or more, says BRC-A program director Jackie McKeon.

They are also more complicated so require a more sophisticated energy buyer, but can be cheaper because businesses (or councils) can cut out the retailer in the middle and get the full benefit of lower wholesale prices – as well as the pain of higher ones. 

Retailer integrated PPAs are a contract with a retailer which brokers the deal, but still locks in a lower long term price for a set volume of electricity and with power sourced from specific wind or solar farms, if that is what the buyer wants.  

“PPAs are getting a bit easier [to navigate], but it does depend on the type of PPA,” McKeon says.

In terms of the possible savings on offer, the dollars and cents can start to add up quickly.

In November, the major of NSW council Cabonne, Kevin Beatty, said the region had saved about $2.3 million in the first six months since a PPA that started in January 2023. 

The 58 GWh pa PPA was with Iberdrola for a consortium of 11 councils south of the Central-West REZ called the Central NSW Joint Organisation.

Councils moving on mass to PPAs

Councils can be heavy users of electricity, with energy sinks such as swimming pools requiring a lot of power to run, and have been signing up to green PPAs for more than half a decade.

In Victoria, ​​the efforts of the Victorian Energy Collaboration, or VECO, have seen 60 of the state’s 79 councils now covered by renewable energy PPAs.

VECO sustainability officer Patrick Lynch says since starting in 2021 their deals have saved councils about $10 million.

The most recent deal closed this month with the 51 original councils and nine new ones signing up to a PPA with Red Energy, which started this month, in what VECO suspects is the largest local government effort on emissions reduction in Australia to date.  

The NSW effort is a little further off, but some councils there are already longstanding users of green power PPAs.

The Southern Sydney Regional Organisation of Councils has signed at least two PPAs.

It signed one in 2018 that saw 18 councils sign with Origin Energy to take the output from the 56MW Moree solar farm, a deal which promised to cut their electricity bills by up to 35 per cent.

The second was in 2022 covering 25 local governments sign a deal brokered by Zen Energy for 214 gigawatt hours (GWh) a year of electricity. Moree was also in the deal, as well as the 132MW Nevertire solar farm in the NSW north west, and the 120MW Hillston solar farm in the Riverina region.

Maximise those community benefits

The story that BCR-A is telling about PPAs to councils is that they’re both a cost saver, as the Cabonne mayor found, but they also give councils access to extra community benefits both for yet-to-be developed renewables projects and those that are already built. 

“Some projects have pushed the boundaries in the communities where they are located, so [social licence and community benefits are a] very important topic at the moment,” she says. 

“PPAs will be a key factor in the ability of regions to access the benefits of renewable energy.”

Councils looking for green PPAs can require that the developer provide some kind of community benefit in order to win their business, such as hiring a certain number of people from the area or funding TAFE courses. 

For renewable projects that are already built, McKeon says councils could look at working with only wind or solar farms that already offer some kind of benefit to their community.