Sydney Airport has decided to turn to wind energy to reduce its electricity costs and lower emissions, and has signed a contract with Origin Energy that will result in three-quarters of its electricity supply coming from the Crudine Ridge wind farm in central west NSW.
A unique contracting arrangement with Origin will use increasingly popular “firming” contracts. In this case, that means that Origin will directly contract with Crudine Ridge and then guarantee the supply to Sydney Airport with “firming” generation or contracts when the wind is not blowing enough to meet the airports needs.
Crudine Ridge is a 135MW wind farm being developed at a cost of around $300 million around 45km south of Mudgee by a partnership of Partners Group and CWP Renewables. It began construction early this year and will be complete late next year.
Crudine Ridge has already contracted to supply around half of its output to Meridian Energy and its local retailer Powershop, as part of a series of renewable energy deals that enable it to lower its consumer tariffs by 5 per cent earlier this year.
Sydney Airport joins a rapidly growing number of corporate customers turning to wind and solar to lower their electricity costs and reduce their emissions, and “firming” contracts are also growing in popularity to hedge against price and supply variations.
Queensland zinc refiner Sun Metals last week formally opened its 116MW solar farm, while companies like CUB, Orora, and the Laverton steel works are also turning to renewables.
UK billionaire Sanjeev Gupta is planning 1GW of solar and storage to power his steelworks in Whyalla, and is using wind and solar to supply other corporate customers, while smaller businesses are also turning to renewables at record levels.
- “This is a significant step forward for the business,” Sydney Airport CEO Geoff Culbert said in a statement as he announced the company’s latest results.
- “This innovative arrangement enables us to lock in wholesale costs under attractive terms for one of our significant cost items, while supporting and fostering the growth of renewable energy in Australia.”
- Alex Hewitt, the head of CWP Renewables, which is also developing the massive Sapphire wind project that will also add solar and storage, as well as the 9GW wind and solar plan in the Pilbara, says it shows how more businesses can be supplied with “cheap and reliable” renewable energy.
At a separate event, Windlab CEO Roger Price – whose company last week signed a power purchase agreement with retailer Flow Power to take much of the output of the proposed 104MW Lakeland wind farm in north Queensland – says corporate interest is growing.
“What we are seeing happen in the market is two fold – the states are taking the initiative to drive their own programs …. as the federal government fails to put together a coherent policy. We are quite optimistic about the nascent but growing demand for corporate PPAs.
“We are starting to see in Australia that with the ongoing uncertainty in the energy sector they (the corporates) will be looking to hedge that exposure, through those contracts.”
Origin Energy’s head of energy markets Greg Jarvis echoed those comments, saying that innovative contracting is allowing customers to source energy with direct line of sight to wind and solar facilities.
“When Sydney Airport approached us wanting a cost-effective way to meet their energy needs and reduce emissions, we developed an innovative agreement where we contract the wind and bundle it with firming energy in an all-in-one package.
“Sydney is Australia’s busiest airport, operating around the clock – the combination of wind and firming is perfect to meet their load and help them transition to cleaner energy supply.”
Origin says the deal was similar to a contract it signed with the University of NSW earlier this year to provide firming generation to complement the planned off-take agreement with the Sunraysia solar farm.
It says there is growing interest from customers wanting more sustainable energy combined with the assurance of firming energy and expert portfolio management.
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.