The best renewable projects should not be just about price, and being responsible should not be a pipe dream

Renewable energy projects are increasingly expected to deliver positive outcomes across multiple social and environmental measures.

‘Getting it right’ is complex, and yet is critical for the energy transition to succeed. Like other industries, renewable energy projects must earn a social licence to operate whilst also working towards meeting Australia’s commitment to a nature positive and net zero future. 

Large energy users investing in renewable energy recognise this opportunity, and developers are also wanting to know what ‘the bar is’ for meeting these challenges.

There are recent and well-publicised examples of corporate renewable Power Purchase Agreements (PPA) deals which have experienced extensive and costly delays, or collapsed because generators did not value the environmental and social aspects of the projects – ultimately leaving energy buyers exposed to reputational risks.

Demand for (PPAs) is expected to continue to gain momentum, with ERM Energetics forecasting a threefold increase by 2030 from the current volume of 24TWh, based on publicly announced scope 2 emissions reduction targets. 

For leading corporations, universities and government bodies, PPAs are an opportunity to reduce their electricity price risk, but also enhance their reputation as leaders in climate change action, supporters of social justice, natural capital and biodiversity conservation.

In fact, with the growth in sustainability linked debt finance, PPAs are increasingly an extension of organisations’ actions to meet targets necessary to unlock lower financing cost. Beyond emissions reduction, these targets typically include employment of First Nations people, improved gender equality and increasingly biodiversity. 

Executed well, and with the right partners, these strategies deliver significant brand value and unlock competitive advantages at a time of increased pressure from shareholders and external stakeholders for organisations to demonstrate climate leadership, and heightened scrutiny of ‘greenwashing’ claims.

Similarly, government agencies are well placed to incentivise improved social and environmental outcomes through their procurement. The announcement of the expanded Capacity Investment Scheme (CIS) by Minister Bowen yesterday is a clear opportunity to integrate stronger ‘non price’ criteria for renewable energy generation and storage projects. 

So how do buyers and sellers of renewable energy assess whether projects will deliver positive social and environmental outcomes?

Buyers need to manage their brand exposure to the social and environmental impacts of projects which underpin their renewable PPAs by proactively identifying risks and opportunities. 

Sellers need to futureproof their projects by taking positive steps during the planning, construction, operational and decommissioning stages to enhance the project’s environmental, social and economic legacy. 

The Business Renewables Centre-Australia, ERM Energetics and WWF-Australia have launched a new guide at this week’s All Energy Australia conference to help corporate energy buyers and sellers navigate this challenge.

Titled “Renewable PPAs that are good for nature, people and your business”, the guide aims to increase the focus on the environmental, climate, community and organisational goals (referred to as ‘ECCO’ goals) of renewable energy projects. 

We hope the guide will raise the bar for delivering on-project community benefits beyond tokenistic efforts seen in some cases. It asks industry to consider how they can directly contribute to the long-term sustainability and viability of communities. 

And it’s not a pipe-dream – the guide is filled with great living examples of recent projects from energy buyers such as IAG, BHP, SA Water, UNE, IAG, Hay Shire Council and energy sellers Neoen, Lightsource bp, Engie, ACEN and Octopus Investments and many more. 

Specifically, it is designed to support the planning for a Request for Proposal (RFP), development of a response to RFP schedules and the design of evaluation criteria by aiding: 

1. Buyers to articulate their sustainability and social licence priorities clearly – and consistently applying this value screen throughout the assessment process and 
2. Sellers to self-assess how their projects measure up against the ‘ecco’ goals as articulated by the buyer. By pro-actively addressing the typical requirements throughout the project life cycle, sellers can enhance their score during procurement processes.   

The guide includes a self-assessment checklist across 11 parameters against the ECCO goals: 

The energy transition provides both opportunities and challenges in addressing the nature and climate crises whilst meeting regional communities’ needs.  The transition can only happen at the pace needed if projects deliver positive environmental and social outcomes.

When properly managed, environmental and social impacts can deliver mutually beneficial outcomes for investors and communities alike and help the energy industry contribute to a future that is good for people and planet. 

Written by Rob Law, senior manager energy transitions at WWF-Australia, Jackie McKeon, program director of renewable energy and carbon at the Business Renewables Centre Australia and Anita Stadler from ERM Energetics.