Steel giant BlueScope turns to solar with major PPA deal

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Australian steel giant BlueScope turns to solar to help power its Port Kembla Steelworks, signing a 7-year power purchase agreement to take the bulk of the output from the 133MW Finley Solar Farm to be located 100km west of Albury.

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Australian steel giant BlueScope is turning to solar to help power its Port Kembla Steelworks, signing a 7-year power purchase agreement to take the bulk of the output from the 133MW (AC) Finley Solar Farm to be located 100km west of Albury.

The landmark deal with ESCO Pacific and Schneider Electric continues the rush of major corporate buyers towards solar technologies, with Finley expected to supply the equivalent of 20 per cent of BlueScope’s Australian electricity purchases, “significantly” reducing costs and providing price certainty.

It also follows a commitment by UK billionaire Sanjeev Gupta to power his steelworks in Whyalla with solar and storage, a commitment that will result in more than 1GW of large-scale solar and storage.

Another major energy user, Sun Metals, has also switched on a 124MW solar plant in north Queensland to supply one-third of the power needs of its zinc refiner and to underpin a major expansion of its operations.

Numerous other major corporate buyers have also turned to wind and solar, with the likes of CUB aiming to go 100 per cent, and packaging giant Orora sourcing wind and solar for 80 per cent of its electricity needs, accentuating the vast chasm between economic reality and Canberra political rhetoric.

“This PPA is one of Australia’s largest corporate offtake agreements, and is the largest with a solar farm to date,” BlueScope’s head of Australian Steel Products John Nolan said in a statement.

“(It) complements our firm electricity supply arrangements, which provide the reliable electricity supply we need for manufacturing processes that must operate 24/7.

“The PPA will help keep downward pressure on our energy costs, and will support the gradual transition to renewable energy.”

There a certain irony in the fact that the deal has been struck by Bluescope, which is seen as one of the more recalcitrant of the big energy users in Australia.

Price details were not released, but it could be expected that Bluescope would pay about 8c-9c/kWh fr ts power, and the solar deal would be around 6c/kWh, including the renewable energy certificates.

ESCO Pacific managing director Steve Rademaker said he was delighted that BlueScope has identified the substantial energy cost savings that a solar corporate PPA can deliver to its business.

“By transacting directly with ESCO Pacific’s Finley Solar Farm, BlueScope’s PPA will enable the project to commence construction later in the year, creating jobs and injecting much-needed value into the local economy,” he said in a statement

“ESCO Pacific strategically identified the site at Finley as an ideal location for a solar farm due to its high solar resource and direct connection to the existing TransGrid owned Finley substation. These factors were critical in helping deliver to BlueScope a cost-effective solar corporate PPA.

Rademaker said ESCO Pacific is seeing “significant inbound interest” from a diverse range of corporates looking to secure low cost electricity, which would help bring more of ts pipeline of projects in New South Wales, Victoria and Queensland, to market.”

NSW energy minister Don Harwin said NSW takes a “technology neutral approach” to energy and “we want to see a diverse range of generation sources to ensure the reliability and affordability NSW needs for the future.”

However, the latest plan unveiled by the Australian Energy Market operator predicts NSW having the most rapid transition to a largely renewables grid, mostly because of the scheduled retirement of all but one of its coal plants over the next 20 years.

“I applaud the innovation, industry leadership and example set by BlueScope, ESCO Pacific and Schneider Electric in taking advantage of the opportunities of our evolving energy market as they enter into this historic agreement,” Harwin said.

“This is one of many great opportunities for NSW industries to harness the power of our state’s abundant natural resources.”

Schneider brokered the deal and acted as match-maker, conducting a tender. Bluescope is contracting for 88MW or 230GWh of this output.

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

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16 Comments
  1. Ralph Buttigieg 5 months ago

    Don should push to have the NSW government allow its departments signup for PPAs. Organisations like the SRA must use huge amount of electricity.

  2. Warwick Sands 5 months ago

    But but but… Renewables can’t power industry particular smelters
    /sarcasm

    • Shilo 5 months ago

      Warwick I think a smelter is a process where you take a mineral and turn it into a metal. I dont think blue scope are doing that, but maybe they are.

      • Phil Shield 5 months ago

        Yes they are. They make steel from iron ore at Port Kembla.

        • Shilo 5 months ago

          Excellent, so its solar supplying a smelter. That is actually quite a deal then.
          Just need it to start happening for Aluminium. In fact say with North Queensland having so much potential for the suite of RE energy’s, a big Aluminium smelter to be build and supplied from Renewables, there. That would put the cat amongst the pigeon’s, so to speak.
          Be really good if it were say a 1 million tonne per year plant.

    • Ben 5 months ago

      Hi Warwick, I believe this PPA will supply 20% of Bluescope’s load, not 100%.
      Solar generates up to about 40% of the time.
      Industry pretty much goes 100% of the time, and although some can defer high loads to daytime, most cannot.

  3. MaxG 5 months ago

    Harwin said NSW takes a “technology neutral approach” to energy… spoken like a true politician… meaning: we hate RE, but what can we do? At least we tell the electorate we are taking an approach to energy, albeit neutral. ‘Neutral’ means “not supporting or helping either side”… and as we know it: certainly not helping RE.

    • Joe 5 months ago

      Hi Max, to be fair to the Don he is not one the countless serial offenders from The COALition ( we’ve heard them all ) that demonises RE at every outing. The problem here in NSW is ‘Our Glad’, she’s the one sitting in the Big Chair, and she is not one to go full tilt with RE….”we can’t transition to renewable energy too quickly”…famous words from ‘Our Glad’. The Don serves at his Leader’s pleasure, so he is mindful ( political speak as you might call it ) on how he talks in public.

  4. DevMac 5 months ago
    • Shilo 5 months ago

      Don’t you mean, Solar, Wind, Pumped hydro, Biomass and battery’s. Solar all by its self, its not actually going to power big industry. Sorry to be picky, just, if we are going to educate the ill-educated we better have our words correct or they will jump on it.

  5. Ben 5 months ago

    Seven years should help see them through cost impacts of the Liddell closure, if it happens.

  6. Robert Johnson 5 months ago

    Aren’t Transgrid saying there are material grid constraints down in that part of their network?

  7. Joe 5 months ago

    I saw Bluescope’s John Nolan on ‘The Business’ ABC show ( last night 20/07/ ) talking about this development. Not only did he mention the economics ( ie RE reducing their energy costs ) but he also said those magical words…. “‘reduce our emissions” Never thought I’d hear those words from them.

    • wideEyedPupil 5 months ago

      Only say it when it happens, not in the abstract and not as something desirable outside anything they’ve done.

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