This article was originally published by Footprint
Corporate interest in contracting with large-scale renewable energy providers will boom this year, predicts Energetics principal consultant Andrew Tipping.
Tipping told Footprint that many businesses have already installed on-site solar PV, and there is growing interest in contracting with owners of large-scale renewable energy projects.
The contracts can be either for the supply of electricity and renewable energy certificates or just for the provision of certificates, he said.
Tipping said signing Power Purchase Agreements (PPAs) with renewable energy providers minimised exposure to price volatility in the electricity market and allowed companies to predictably forecast their energy costs.
The falling price of renewable energy was another reason for the growing interest in PPAs, he added, noting that AGL had this month signed a five-year PPA to purchase electricity from the 200MW Silverton wind farm for only $65MWh.
Costs for large-scale solar are also coming down significantly, he said.
Tipping said companies contemplating a PPA need to have "a full understanding" of their contracting options.
Deciding what's the right choice for your company will depend largely on "what risk you are willing to take and what you want the counterparties to take", he said.
The level of complexity your business can handle is another consideration – "what we are seeing at the moment is that people still want something that is as simple as possible".
Finally, the contract term is also important – "if you can go long-term you are going to have more of a cost saving".
Those looking at PPAs include government entities and large companies, Tipping said.
"Generally it is the big end of town."
A number of businesses are also involved in renewable energy buying groups, such as those led by Melbourne City Council in Melbourne (see background) and JLL in Sydney (see background).
The buying group model "is very scalable", Tipping noted.
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