We’ve heard unfortunate stories of companies exposed to energy prices up to four times what they’ve been used to paying. For some businesses, these sorts of price increases in gas and electricity may prove fatal.
One consultant helping property companies like AMP Capital reduce exposure to rising prices is Professional Utility Board, or PUB, and one of its tactics is getting more renewables into the mix.
The company started in 2006, and has grown from a “one-man band” in 2006 through to 16 staff today, according to sales director Patricia Paech.
“The entire team has 150 years’ combined energy experience,” she told The Fifth Estate.
Paech says up until the company entered the market, energy procurement was simply “a market of brokerage”.
“There was very little in the way of innovation.”
Now it’s leading the space in corporate renewable power purchase agreements, and Flex Wholesale Purchasing.
PUB was one of the first in Australia to engage in the Flex Wholesale Purchasing sector.
Whereas a fixed price contract can be easy to manage and make energy costs predictable for budgets, a well-structured flex contract – where energy can be pre-purchased well in advance in chunks – can take advantage of fluctuations in the wholesale energy price to set customers up for the future.
“We first wrote our Flex agreement in 2012, when the market was buoyant and many savings were to be had compared with the traditional retail market,” Paech says.
“Interestingly, this is where Flex made a good impression on our clients, and they were able to maximise savings due to the flexibility of buying in quarters and when the market ‘dipped’. For example, for a client consuming annually 150GWh, a $1/MWh dip meant $150,000.”
She says there are a lot of large organisations that wouldn’t have been caught out by recent large price rises if they had been on flex or wholesale pricing contracts.
Renewables are the next wave
Paech says PUB has known for years that the next wave in energy procurement was going to be renewables.
“Early in 2010 all information gathered by PUB suggested that solar would become on parity with fossil fuels between 2014 and 2018,” Paech says.
“With the advent of the Paris Agreement, which was ratified to post-2020, we began the process in late 2015 of sourcing pricing, projects and opportunities for our large clients.”
One client PUB has helped is AMP Capital, starting off with bill validation five years ago, and now looking into power purchase agreements.
“With AMP we assist with all their energy related queries, including embedded networks, energy on-charging – entire energy strategies. We believe we’re like the energy arm of AMP, rather than an external consultant,” Paech says.
She says public sector players have been able to be more proactive in the PPA space “because they don’t have to do risk assessment in the same way corporates do”.
“They can very quickly put something together, like UTS, and other universities. They aren’t restrained as much as the corporates.”
But now corporates are entering the space more and more as wholesale prices go up and the cost of renewables come down.
“It’s about de-risking,” PUB senior energy analyst Abhi Nithyanand says. “Not just signing all energy on a PPA, but some of it, then continuing to do Flex.”
Paech says the company works with corporates to find “the right structure” and the right retailer for their PPAs.
“Clients need to consider whether they want on-site solar or off-site generation,” she says.
“As an example of an off-site generation project, a client company could sign a long-term (more than 10 years) PPA with a renewable energy generator for, say, 25 per cent of the client company’s total national load. We would review their sites and recommend an appropriate matched load for a specific state.
“It means looking in the right state [to locate] the right project – one that’s robust enough for a big corporate.”
Paech’s key for success for businesses worried about energy is proper planning and management.
“Plan well ahead and use the primary drivers emanating in the market place, such as coal-generated closures, increased activity in battery storage, and liaise with experts,” she says.
“Clients need to move away from being just a ‘consumer’ to a ‘prosumer’ to keep their businesses profitable and viable.”