Blog

With renewable energy targets at the front of companies’ minds, Firmed PPAs are frequently being seen as an avenue to help achieve ambitious targets. However, there are pitfalls to consider when looking at a Firmed PPA that are examined further below.

To say 2020 has been challenging would be an understatement! Based in Melbourne, we have gone from extreme bushfires to a pandemic that has shut down Victoria not just once, but twice.

An opportunity opens up.

Spot Market electricity prices were down in August, reflecting lower demand due to milder weather and the on-going impacts of Victoria’s lockdown, and from increased renewable generation.

Alcoa’s Portland smelter received over $200 million in Australian Government subsidies back in 2017 to enable it to keep operating for a further four years. This package expires in the middle of 2021 and, without further subsidies or guarantees of cheap electricity, there are question marks over whether the smelter will stay open. Similar question marks hang over Rio Tinto’s three Australian aluminium smelters. Last year Rio’s CEO stated that they were “on very thin ice” in relation to their viability.

As you know, measurement enables management. So if you want to start decarbonising your operations, the first step is to set up measurement and reporting systems.

Our colleagues over in New Zealand recently helped their most iconic sporting facility, Eden Park, score a better deal.

Eden Park is a big energy consumer, with catering companies and sports associations among the tenants it serves. And that’s before you even factor in the cost of switching on those massive floodlights.

Last month we showed some analysis that indicated that the impact of Covid-19 on electricity demand in Australia was not as great as many other countries. Demand was down by 3% across Australia but factors such as the weather and increased roof-top solar may have been greater contributors to this change than the lockdown brought on by Governments reaction to the virus.

As lock-downs have been put in place around the world due to COVID-19, many countries have experienced reductions in their electricity demand. The following graph was widely published showing typical drops in consumption

With many of my clients being approached about signing up to Renewable Power Purchase Agreements, I thought it would be timely to discuss one of the less talked about risks associated with a Wholesale PPA – the relationship of wholesale prices with output from the project.

Our GM of Australia, Rod Boyte, gives a stern warning about the demise of the NEM.