brc-a queensland launch monday 25th nov 2019 … · monday 25th nov 2019 jackie mckeon, program...
TRANSCRIPT
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BRC-A Queensland Launch
Monday 25th Nov 2019
Jackie McKeon, Program Director, BRC-A
Jonathan Prendergast, Technical Director, BRC-A
BRC-A & Renewable PPAs
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237 companies with SBTs
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RE100 – 211 Companies
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Renewable PPAs in Australia
https://www.energetics.com.au/insights/knowledge-centres/corporate-renewable-ppa-deal-tracker/
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Why PPAs?
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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)
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PPA pricing?
Technology costs and competition mean renewable PPAs offer savings to market
price
20
10
20
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20
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20
13
20
14
20
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20
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20
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20
18
20
19
0
50
100
150
200
250
300
350
$/M
Wh
(re
al 2
01
9)
PPA Price NSW Price
Technology costs
Competition
20-30
RE targets
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How does a PPA work?
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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
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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
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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
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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
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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
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National PPA market
▪ Large deals are mostly
Wholesale PPAs
▪ Australian Market is rapidly
diversifying into Retail
PPAs & mid-sized buyers
▪ Market is consolidating
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58 Projects
2260 MW Contracted
5200 MW Projects
Supported
Corporate PPAs so far
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▪ 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
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Corporate PPAs an important segment in
diversified market
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
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
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Corporate PPAs & Energy Transition
-100
100
300
500
700
900
1,100
1,300
1,500
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)
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Mostly supporting new deals
71
22
7
New Project Confirmed Project Operating
Capacity contracted through PPAs (%, MW)
5919
22
New Project Confirmed Project Operating
Number of PPAs (%)
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Growing diversity in deal size
<20MW 20-50MW 50-100MW 100MW+
0
5
10
15
20
25
30
35
40
Average size (44 MW) and Median (30 MW) falling as smaller Retail PPAs become more common
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Where are the deals?
0.0
5.0
10.0
15.0
20.0
25.0
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Victoria is currently leading
0
200
400
600
800
1000
1200
Victoria QLD SA NSW Tas
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Queensland generation
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▪ $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
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Queensland solar PPAs
$0
$20
$40
$60
$80
$100
$120
2019 2020 2021 2022 2023
$/M
Wh
Solar Farm PPA - Annual Costs and Revenues - Scenario 2
NEM Pool Revenue RECs Revenue Solar Farm PPA Cost
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▪ Highly dependent on market changes
▪ Aggregation for large scale wind
▪ Retail PPAs to maximise use of low cost solar
Queensland PPA outlook
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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
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Options for smaller buyers?
• Retail PPAs
• Group PPAs / aggregation
• PPA with existing wind or solar
farm
• Intermediated
• Other (LGC only, self-investment,
others)
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BUYERS, DEVELOPERS SERVICE PROVIDERS
PROJECTS MARKETPLACEBUYER PPA RESOURCES COLLABORATION TRAINING & EVENTS
https://businessrenewables.org.au
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https://members.businessrenewables.org.au/
Members’ portal
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https://members.businessrenewables.org.au/
Buyers’ Roadmap
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Resource Library
https://members.businessrenewables.org.au/
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• 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
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• 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…
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More information…
www.businessrenewables.org.au
or contact:
Jackie McKeon, Program Director
Jonathan Prendergast, Technical Director
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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
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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
43
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
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Procurement – Retail Electricity Services
44
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
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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
50
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Thank You
51
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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
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UQ’s Journey to 100% Renewable:
Warwick Solar FarmAndrew Wilson
Manager – Energy & Sustainability
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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
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Energy impact – St Lucia
55
• 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)
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UQ’s load profile
56
Q4
Q2
Q3
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Energy Management at UQ
57
• 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
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Warwick Solar Farm – Rationale
58
▪ 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
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Warwick Solar Farm - History
59
• 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
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The Solar Farm comes to life…
60
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The Solar Farm comes to life…
61
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The Future of Energy Management at UQ
62
• 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
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Thank you
facebook.com/uqsustainability
Instagram.com/uqsustaianbility
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BRC-A Queensland Launch
Monday 25th Nov 2019
Angela Heck, Senior Manager Sustainability
CitySmart Brisbane
Practical solutions for QLD-based corporates
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Educate & Qualify Procure
Repeat
Hosted by
Brisbane RE Buyers Group
The first step in developing a permanent procurement
facility
Identify Interested Buyers
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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
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BRC-A Queensland Launch
Monday 25th Nov 2019
Thank you!