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.