BRC-A Queensland Launch

Monday 25th Nov 2019

Jackie McKeon, Program Director, BRC-A

Jonathan Prendergast, Technical Director, BRC-A

BRC-A & Renewable PPAs

237 companies with SBTs

RE100 – 211 Companies

Renewable PPAs in Australia

https://www.energetics.com.au/insights/knowledge-centres/corporate-renewable-ppa-deal-tracker/

Why PPAs?

Why PPAs?

• Fastest way to reach

ambitious targets

• Volatility of electricity

market

• Renewable energy cost

reduction:

Cheap enough for

benefits to be worth the

costs

An energy buyer may seek a PPA to secure lower energy pricing as a PPA can

reduce the cost of electricity below standard retail offer.

‘A well negotiated PPA can potentially provide savings between 15-47% on the

energy component of a typical electricity bill expected in 2020’ (Energetics, 2018)

PPA pricing?

Technology costs and competition mean renewable PPAs offer savings to market

price

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100

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$/M

Wh

(re

al 2

01

9)

PPA Price NSW Price

Technology costs

Competition

20-30

RE targets

How does a PPA work?

Case Study I: Retail & Aggregation

Australian Hotels Association Australia

and ENGIE AU/NZ

Type Buyer Developer Retailer Project Volume Term

Retail, Aggregation

AHA ENGIE Simply Energy

Silverleaf Solar Farm, 120MW AC

N/A 10 years from Jan 2020

Case Study II: Wholesale

Coles and Metka EGN

Type Buyer Developer Retailer Project Volume Term

Wholesale Coles Terrain, acq. MetkaEGN

N/A June + Wagga + Corowa Solar = 90MW

>154GWh p.a.; 10% of total load

10 years from Jul 2020

Case Study III: Wholesale & Aggregation

Intelligent Water Network/

Zero Emissions Water and Total Eren

Type Buyer Developer Retailer Project Volume Term

Wholesale, Aggregation

13 Water Utilities

Origin N/A Kiamal Solar Farm, 200MW AC

N/A N/A

Case Study IV: Small Retail

Ascham School and Flow Power

Type Buyer Developer Retailer Project Volume Term

Retail (small) Ascham School

N/A Flow Power Wind, Solar 90% N/A

Case Study V: Aggregation

Victorian Greenhouse Alliances

Type Buyer Developer Retailer Project Volume Term

Aggregation 48 Local Councils

RFP soon RFP soon RFP soon 246GWh p.a.; 44%

RFP soon

National PPA market

▪ Large deals are mostly

Wholesale PPAs

▪ Australian Market is rapidly

diversifying into Retail

PPAs & mid-sized buyers

▪ Market is consolidating

58 Projects

2260 MW Contracted

5200 MW Projects

Supported

Corporate PPAs so far

▪ Coles, NSW Solar Farms (x3) – 90 MW

▪ Bluescope, Finley Solar Farm (NSW) - 133 MW

▪ Westpac, Bomen Solar Farm – 63 GWh

▪ Mars, Kiamal Solar Farm – 220 MW (project)

▪ Kelloggs, Beryl Solar Farm (NSW) - ~25 MW

Recent large PPA deals

Corporate PPAs an important segment in

diversified market

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10%

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30%

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50%

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100%

2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3

Utility PPAs Corporate PPAs Government PPAs Merchant projects

Corporate PPAs & Energy Transition

-100

100

300

500

700

900

1,100

1,300

1,500

2016Q2

2016Q3

2016Q4

2017Q1

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2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

Electricity market (Utility PPAs & Merchant Projects)

Non-electricity market (Corporate PPAs & government auctions)

Mostly supporting new deals

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22

7

New Project Confirmed Project Operating

Capacity contracted through PPAs (%, MW)

5919

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New Project Confirmed Project Operating

Number of PPAs (%)

Growing diversity in deal size

<20MW 20-50MW 50-100MW 100MW+

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Average size (44 MW) and Median (30 MW) falling as smaller Retail PPAs become more common

Where are the deals?

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Victoria is currently leading

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Victoria QLD SA NSW Tas

Queensland generation

▪ $59 / MWh last 12 months for solar farms (plus

LGCs)

▪ Low Solar Farm costs

▪ Solar Farms excellent winter production

▪ Wind farms excellent uncorrelated production

▪ Transmission constraints & Abundant Generation

Queensland market

Queensland solar PPAs

$0

$20

$40

$60

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2019 2020 2021 2022 2023

$/M

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Solar Farm PPA - Annual Costs and Revenues - Scenario 2

NEM Pool Revenue RECs Revenue Solar Farm PPA Cost

▪ Highly dependent on market changes

▪ Aggregation for large scale wind

▪ Retail PPAs to maximise use of low cost solar

Queensland PPA outlook

PPA scale

Very Large200 GWh +

p.a.Over

100 MW

Project finance over

$100m

Very cost competitive

PPA

Large50-200 GWh

p.a.Over

30 MW

Project finance over

$30m

Competitive PPA

Medium20-50 GWh

p.a.Over

10 MWFinance mix Partial PPA

SmallUnder

20 GWh p.a.Under 10 MW

Project finance

challenge

Other options

Options for smaller buyers?

• Retail PPAs

• Group PPAs / aggregation

• PPA with existing wind or solar

farm

• Intermediated

• Other (LGC only, self-investment,

others)

BUYERS, DEVELOPERS SERVICE PROVIDERS

PROJECTS MARKETPLACEBUYER PPA RESOURCES COLLABORATION TRAINING & EVENTS

https://businessrenewables.org.au

https://members.businessrenewables.org.au/

Members’ portal

https://members.businessrenewables.org.au/

Buyers’ Roadmap

Resource Library

https://members.businessrenewables.org.au/

Marketplace

https://members.businessrenewables.org.au/

• Brisbane: early 2020.

• One-and-a-half days, scenario-

based workshop.

• Experienced Buyers’ Faculty.

• Energy Procurement Managers,

Sustainability Managers, Finance

Managers and CFOs, Contracts

Managers / Legal.

• Shared experiences.

• 25 participants, 25 Buyers Faculty

– Chatham House Rules.

• Ask questions, safe environment.

https://businessrenewables.org.au/eve

nts-and-webinars/

Energy Buyers Bootcamp

• Join BRC-A as a member to gain access to the free

resources.

• Attend BRC-A Training ‘Bootcamps’ and webinars. Scenario-

based training with organisations that have executed

• Buyers’ Bootcamp Brisbane (early 2020)

• Developer mini-Bootcamps - TBA

• Webinars

• Online tour of platform

• Industry networking events

• All Energy – 23rd-24th Oct (Melbourne)

• Industry reports and case studies

• One-on-one support

• News & blogs

Where can I learn more…

More information…

www.businessrenewables.org.au

or contact:

Jackie McKeon, Program Director

e. jackie@businessrenewables.org.au

Jonathan Prendergast, Technical Director

e. jonathan@businessrenewables.org.au

BRC-A Queensland Launch

Monday 25th Nov 2019

Simon Crock, Co-ordinator Commercial Analysis,

Sunshine Coast Council

PPA Buyer Case Study I: Sunshine Coast Council

Solar Farm Project

Brisbane BRC-A Launch & Briefing

25 November 2019

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2010 - 2012 2013 - 2015 2015 - 2016 2017 - 2018

Note:

• Roadmap focuses on PPA - whereas Council went BOO+PPT

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Procurement Design Construct Operate & Maintain

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EOI

ETI

Tender

2013/14 - 48 Submissions, 10 interviewed – market knowledge

Preferred Supplier

2014 – 4 Shortlisted Entities

2015 – 2 Final Submissions

SIGNED CONTRACT 2016 – $37.5m for ‘D&C’

2015 – Downer Utilities

Procurement – Retail Electricity Services

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EOI

Shortlist

Tender

2013/14 - 48 Submissions, 5 retailers – market knowledge

Preferred Supplier

Interviewed all

2014 – 2 Final Submissions

SIGNED CONTRACT2014 ESA2017 PPT

2014 – Diamond Energy

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Solar Farm – typical day

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Solar Farm –typical day

BUY

SELL

BUY

EXPENSE

REVENUE

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2017- 18 2018 - 19

Monthly generator performance v forecast

Electricity usage and spend

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Summary – lessons learnt• Alignment with vision and policy• Continuity of personnel• Early, frequent and transparent consultation with key

stakeholders • Consistently revisiting underlying assumptions• Detailed financial modelling with appropriate stress testing• Need for specific multi-disciplinary project teams• Complex contracts tailored to project’s needs and equitable

to both parties.• Managing project schedule to practical completion• Post project performance analysis

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Thank You

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BRC-A Queensland Launch

Monday 25th Nov 2019

Andrew Wilson, Manager of Energy & Sustainability,

University of Queensland

PPA Buyer Case Study II: University of Queensland

UQ’s Journey to 100% Renewable:

Warwick Solar FarmAndrew Wilson

Manager – Energy & Sustainability

About UQ

54

• Queensland’s oldest and largest

university – founded in 1910

• Over 52,000 students and around

6,600 FTE staff

• Ranked in Top 50 universities in

the world

• Revenue of A$2 billion+ (2018)

• Main campuses at St Lucia,

Gatton & Herston

Energy impact – St Lucia

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• 540+ buildings across 25 sites with GFA of almost 800,000 m2

• Electricity usage in 2018 was ~140 GWh

• Gross electricity spend = ~$20 million per annum

• Peak demand = ~25 MW

• Many energy intensive spaces (labs, 24x7 libraries, art galleries)

UQ’s load profile

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Q4

Q2

Q3

Energy Management at UQ

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• Significant gains in energy efficiency first – now approaching a ‘ceiling’

• Always had strong focus on solar (e.g. 1.2 MW in 2011, 3.3MW Gatton SF in 2015)

12% reduction

from peak

Warwick Solar Farm – Rationale

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▪ PPA vs. Build, Own, Operate (BOO)

▪ UQ has a ‘hand’s on’ attitude, building on experience from Gatton SF

▪ More research and engagement opportunities

▪ Unique commercial advantages create LCOE competitive with PPA prices

▪ Desirable site criteria

▪ Greater than 70 MWdc

▪ Driving distance from St Lucia & Gatton campuses

▪ Amenities of a regional centre

▪ Partner with solar developer

▪ Solar development not core business, but have BOO experience

▪ BAU NPV vs. WSF NPV to calculate financial benefit

▪ No ‘new’ money needed for project – just reallocation of Utilities spend

▪ Self retirement of LGC obligation vs. purchase via retailer

▪ Likely cost savings from of managing risk in-house vs. retailer margin

Warwick Solar Farm - History

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• Building on success of Gatton SF, question asked: “How much land would we need….?”

• March 2017 – Commissioned pre-feasibility study

• May 2017 – Started internal business case development

• August 2017 – Senior Executive committees approved

• October 2017 – UQ Senate approved business case

• December 2017 – Development & sale agreement with Terrain Solar signed

• June 2018 – Public announcement

• November 2018 – Design & construction commenced

• February – work starts on site

• November 2019 – Mechanical Completion

• Early 2020 – Grid commissioning

• Mid-2020 – UQ will be 100% renewable

3 years

from idea

to

completion

The Solar Farm comes to life…

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The Solar Farm comes to life…

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The Future of Energy Management at UQ

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• UQ transitioning to spot price exposure

from 1 Jan 2020

• Future is no longer be about quantity of

kWh used – it is about timing of when

energy is used

• Projects that reduce ‘shoulder’ period

energy usage will of most value to us

• Strong storage and demand response

focus – already underway

• UQ at cutting edge of this now, but

likely to become the ‘new normal’ for

many in ~5 years time

Thank you

facebook.com/uqsustainability

Instagram.com/uqsustaianbility

BRC-A Queensland Launch

Monday 25th Nov 2019

Angela Heck, Senior Manager Sustainability

CitySmart Brisbane

Practical solutions for QLD-based corporates

Educate & Qualify Procure

Repeat

Hosted by

Brisbane RE Buyers Group

The first step in developing a permanent procurement

facility

Identify Interested Buyers

Troy McGrath, Market Development – 07 3007 7004

Angela Heck, Sustainability Marketing & Communications

https://www.citysmart.com.au/news/how-to-reduce-costs-by-buying-renewable-energy-direct/

Thank you

BRC-A Queensland Launch

Monday 25th Nov 2019

Thank you!