Victoria seeks to “de-risk” corporate PPAs, reduce barriers

The Victorian Labor government is hoping to clear the way for more businesses to sign up to renewable energy power purchase agreements, or PPAs, with the launch of a consultation paper on the subject this week.

State energy minister Lily D’Ambrosio said on Tuesday that the Market Facilitation Platform Consultation Paper would explore whether an online platform could remove some of the barriers to PPAs and help bring businesses and renewable energy generators together.

“We want to know if an MFP could help: improve accessibility to PPAs by supporting more interaction between electricity users and existing and new renewable energy developers (and/or dispatchable generators such as battery systems); deliver more competitive electricity or more price certainty; enable C&I electricity users to achieve their sustainability objectives; stimulate a more stable pipeline of new renewable projects,” the 21-page paper says.

The consultation is calling for feedback from commercial and industrial electricity users of all sizes, electricity retailers, renewable energy developers, investors and financiers, power purchase agreement facilitators and specialist service providers.

“As we transition to renewable generation and storage, we want to understand the best way to create a more competitive electricity supply for businesses,” D’Ambrosio said.

“This consultation is an opportunity for everyone including businesses and renewable energy providers to share their perspectives on how to reduce barriers to accessing low-cost, clean electricity.”

Solar and wind energy-based corporate PPAs have become an increasingly popular way for businesses to green up their power supply in Australia, while also working to underwrite new solar and wind projects.

But corporate PPAs are not always easy to set up and are exposed to a number of key market risks – the same sort of risks that are currently troubling renewable energy developers in an increasingly crowded market.

According to law firm Allens, these risks include project connection delays, a changing energy regulatory landscape, and potential problems arising due to contracts with multiple offtakers of the same renewable facility.

In some cases, companies have opted to sign deals for large-scale generation certificates generated by existing solar or wind projects, rather than for LGCs and electrons together, due to the difficulties presented by more complicated “bundled” PPA contracts.

Just last week, Australian supermarket giant Coles announced new deals to source LGCs only from existing wind and solar farms across Australia to make up the final portion of electricity required to meet its 100% renewable by FY25 target.

The Victorian government’s consultation paper will ask a number of questions around the barriers to PPAs, including whether a financial intermediary could de-risk them, what role the state could play in making the process easier, and whether there might be other better suited mechanisms or ways to achieve the same result.

“By making it easier to enter into power purchase agreements, we will save businesses time and money and generate more demand for renewable energy − which will help us reach our target of halving emissions by 2030,” D’Ambrosio said on Tuesday.

Consultation on the paper closes on Friday November 26. Interested parties can have their say at engage.vic.gov.au, or register for a briefing session at energy.vic.gov.au/powering-business-in-victoria.