BRC-A Queensland Launch Monday 25th Nov 2019 … · Monday 25th Nov 2019 Jackie McKeon, Program...

transcript

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?

• Fastest way to reach

ambitious targets

• Volatility of electricity

market

• Renewable energy cost

reduction:

Cheap enough for

benefits to be worth the

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

PPA Price NSW Price

Technology costs

Competition

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

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

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

Retail (small) Ascham School

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

Case Study V: Aggregation

Victorian Greenhouse Alliances

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

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

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

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

New Project Confirmed Project Operating

Capacity contracted through PPAs (%, MW)

New Project Confirmed Project Operating

Number of PPAs (%)

Growing diversity in deal size

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

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

Where are the deals?

Victoria is currently leading

Victoria QLD SA NSW Tas

Queensland generation

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

▪ Low Solar Farm costs

▪ Solar Farms excellent winter production

▪ Wind farms excellent uncorrelated production

▪ Transmission constraints & Abundant Generation

Queensland market

Queensland solar PPAs

2019 2020 2021 2022 2023

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

Very cost competitive

Large50-200 GWh

p.a.Over

Project finance over

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

• 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

Buyers’ Roadmap

Resource Library

Marketplace

• 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

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

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

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

Procurement Design Construct Operate & Maintain

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

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

Solar Farm – typical day

Solar Farm –typical day

EXPENSE

REVENUE

2017- 18 2018 - 19

Monthly generator performance v forecast

Electricity usage and spend

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

Thank You

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

• 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

• 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

Energy Management at UQ

• 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

▪ 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

• 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

completion

The Solar Farm comes to life…

The Future of Energy Management at UQ

• 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

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

Thank you!

BRC-A Queensland Launch Monday 25th Nov 2019 … · Monday 25th Nov 2019 Jackie McKeon, Program...

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