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Renewable power deals for business - PPAs
- 1. Sola Presentation to Linx Australia April 2017 Webinar presented on 12/04/18 hosted by Matthew van der Linden David Evans Stephen Au Managing Director/Founder Director of Projects Senior Business Development Manager and Engineering Real lessons from PPAs Renewable power deals
- 2. Introductions → More than 20 years working with businesses to save them on energy bills → Spends large amount of time coding Matthew van der Linden Founder/Director → Electrical Engineer with years of experience in Australia and NZ → Proud owner of boxer x staffy named Tonka David Evans Director of Projects → Experienced professional in Renewable Energy advisory, finance and commercialisation → Raised in a Malaysian town called “Sitiawan”, translates to “loyal friend” in English. Stephen Au Senior Business Development Manager
- 3. Flow Power is a licensed electricity retailer that focuses on inventive solutions to make electricity better for Australian businesses.
- 4. Overview 1. The changing power market 2. Corporate PPAs explained 3. An example 4. Questions
- 5. Credit: AEMO 2018 | AEMO observations: Operational and market challenges to reliability and security in the NEM The power market is changing (quickly) NEM plant mix 2008 - 2017
- 6. Energy LGCs Renewable prices Energy LGCs Standard retail contract Two different market offerings $ $ Customers are not seeing the price flow through
- 7. A win-win solution Cost savings and lock in transparent low rates Reduced carbon emissions and secure LGC price Improve brand Businesses Certainty needed by investors Community support Security of pricing Renewable projects
- 9. Corporate PPAs A PPA or Power Purchasing Agreement is a contract between parties to buy power It becomes a Corporate PPA when it is a business that is using the power rather than part of a retailer’s portfolio. Your Business The NEM Renewable generation Retailer There are many ways to do it
- 10. The options are endless Energy based Virtual Behind the meter Sleeved Modified Virtual Synthetic LGC only VGA PPA Corporate renewable power purchasing agreement Green hedging Wholesale renewables Corporate renewables Financial Contract for difference Onsite Physical
- 11. There are two types Onsite Offsite →Often called ‘Behind the Meter’ →Power generated on site →Network costs are minimised →Normally smaller projects →Generation is within the State but not close to site →Power is supplied via the NEM →Normally utility scale projects with economies of scale →Structures can be either Financial or Energy based
- 12. The Flow Power solution Solar minus the panels Solar minus the panels Your Business Wind minus the turbines Wholesale market Onsite solar batteries
- 13. An example
- 14. Meet George. He runs a factory He’s read about other businesses signing PPAs He needs a new way to buy power and avoid rising costs George called Flow Power to understand how a PPA could work for his business News headlines Telstra, Coca-Cola Amatil and ANZ invest in what will be Australia's largest wind farm. – The Sydney Morning Herald Olam signs long term renewable corporate PPA with Flow Power – The Australian Financial Review Powering ANCA with a wind PPA – Renew Economy
- 15. We looked at George’s power use He uses most of his power during the day So we matched his use to the best mix of generation profiles Wind runs through most of the day, while solar peaks in the middle That makes sure that he’s optimizing the value of the PPA in line with his operations Wind farm output George’s load Solar plant output 12:00am 12:00pm 12:00am Time of day
- 16. Nearly 90% of George’s power can be sourced through PPAs with Wind and Solar. He knows the rate he’s going to pay for 90% of his power for the next ten years He’s spread across two plants More importantly, that rate is much cheaper than the market The rest gives him the flexibility to look at other options in the future 12:00am 12:00pm 12:00am Time of day Export to market 2% Remainder from market 10% Solar plant offtake 37% Wind farm offtake 51%
- 17. Renewable rates are significantly less than fixed rate offers. In this example, George saved 35% on his energy costs in the first year. In some examples this can be as high as 45%. Add in demand response and it could be even more significant. Market Solar Wind Fixed contracts Wholesale renewables Standard contract 35% saving
- 18. What to consider when looking at a PPA PriceTermStructureUsage Profile
- 19. 04/07/17 Next steps? Call us for a chat on 1300 08 06 08
- 20. Questions?
Editor's Notes
- Matthew: Thanks for joining us today. We are really excited that so many people were interested in learning about Corporate PPAs. Firstly some housekeeping: We’re aiming for this session to run for 45 mins. Half an hour for the presentation and then 15 minutes for discussion and questions If you have questions, please hold onto them we will answer them at the end We will send out the slides and a recording at the end of the discussion and they will be published on our website With me I have David Evans and Stephen Au <David> - Hi <Stephen> Hi
- Flow Power is a licensed electricity retailer that focuses on finding inventive solutions to make electricity better for Australian businesses Our model is based around giving businesses direct access to the wholesale market. We are all about transparency, flexibility and choice. Today we will talk about Corporate PPAs, which is about giving businesses the opportunity to directly buy power from generators.
- Matthew - Today we will cover off on the following
- There’s more renewables coming online. Deals are being signed now. More low cost power
- Buying directly from generators is cheaper Under a traditional standard retail contract customers don’t often see the pass through of cheap renewable energy Ability to obtain cheap LGCs
- These are the benefits and it works for both sides. Stephen: In my experience and I have worked with renewable projects in the past The benefits of PPAs are great for Needs of investors Community Certainty around pricing Matthew From working with businesses for over 20+ years the benefits for businesses are substainal Cost savings Transparency Long term certainty Reduction of carbon
- David – What is a PPA (very generic) It involves deals between businesses, renewable generation and retailers via them NEM It may involve a range of generations sources including onsite generation it really depends on your business energy needs.
- There’s a lot of noise in the market for the different solutions. Yyou've heard from many people on how these are all emerging. Plenty of PPAs have been signed in the market. On our journey to sign the recent ones with Ararat Wind Farm we explored many of these. And there are plenty of businesses out in the market telling people that their model works. At the end of the day businesses need to match the solution to their business structure.
- There are two main types of PPA’s on site and offsite, For the off site
- Explain Flow Power model and why it works Wholesale renewables power is an agreement to buy part of your business power directly from a solar or wind plant. You buy a percentage of the plant's output in real time through the wholesale market