Buying power and renewable energy in volatile markets

Know the market trends

More and more corporates are setting net zero and renewable energy commitments with pre-2030 targets. At the same time, Australia’s energy markets are in upheaval and energy price instability over the coming years will be sustained due to the tight reserve capacity margin in under-supplied markets, international linkages to balkanised energy commodity markets, and the increasing penetration of variable renewable energy.

For buyers of power, more active management of exposure to the electricity and renewable energy certificate markets is needed and a dynamic strategy to manage risks and meet targets in our fast-changing energy markets. ​

 

Long term renewable electricity deals offering multiple strategic benefits

Design a PPA well and it can deliver cost reductions, a hedge against energy market volatility, greater budget certainty, and emissions reductions in keeping with a net zero or carbon neutrality commitment. It can also unlock other benefits underpinning sustainability-linked debt finance such as employment opportunities for Aboriginal and Torres Strait Islanders and gender diversity.

Energetics has negotiated more than 40 renewable financial and retailer-intermediated PPAs since 2017 and advised clients behind about 40% of the volume contracted under corporate PPAs in the NEM since 2020.

 

Managing risk under a progressive purchasing arrangement

Beyond tailoring long term renewable energy transactions, with the current market volatility, there is significant value to manage proactively shorter term purchasing requirements in the electricity and environmental certificate markets. We currently advise customers with TWh+ portfolios to forward purchase their electricity supply requirements, renewable energy certificates and white certificates. We apply market risk metrics, forward market simulations and market-leading market monitoring capabilities to inform decision making. We also ensure alignment between corporate risk objectives and portfolio performance through active management of risk limits.

Insights and advice

     

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