Flow Power’s recently inked renewable corporate power purchase agreement with Ararat Wind Farm will give its large customers access to energy for around half the price of grid drawn power, in a move that could unleash a tide of similar agreements across the country.
Flow Power founder Matthew van der Linden said the agreement was for an initial tranche of 10 megawatts over about a decade that the retailer would supply direct to its large energy-using customers.
He told The Fifth Estate the agreement was a milestone he expected would result in “hundreds and thousands” of megawatts of renewable energy being contracted under similar agreements by his firm and others.
He said that while the big gentailers have had PPAs in place with renewable energy developments for some years and gained cheap, clean energy, it is then supplied at a premium price to consumers as Green Power.
By contrast, the electricity from the Ararat Wind Farm will be sold at around half the price of standard mains grid power charges.
The challenge was getting the wind farm to agree to obtaining a lower price – but for a longer and more certain term – than it had been receiving selling straight into the grid.
It has traded short-term profit for long-term income security, Mr van der Linden said.
For customers, they will be able to say “a bit of that wind farm is mine”.
It’s not about corporate social responsibility – it’s about cost
He said the company’s customers were not seeing corporate social responsibility or sustainability as the main driver for this kind of offer – they are feeling the pain of soaring energy prices.
High prices have also made it difficult for companies that want to use Green Power, he said, as it imposes a cost premium.
The PPA arrangement means they can have both benefits – lower energy costs and clean energy.
Over the past six to 12 months, he said, the company has had a lot of customers “desperate to get access” to cheap renewable energy.
PPAs were a workable proposition for businesses that couldn’t erect onsite renewable such as solar PV, he said.
“It’s also much simpler than installing onsite – you just sign a contract.”
Mr van der Enden said the company was now looking at other providers, both established large-scale solar and large-scale wind, as well as projects in the pipeline for further PPAs.
A major driver of investment
Renewable PPAs could become a major driver of investment in the sector, he said.
“The power market is changing, and this agreement with Ararat Wind Farm marks a line in the sand for the energy sector in Australia.
“Renewable corporate PPAs are the key to keeping business power costs down, and our aim is to be able to offer these savings to all large energy users across the country.
“Corporate PPAs have proven successful internationally over the past decade, and we are proud to bring the model to Australia in partnership with Ararat Wind Farm. We are actively working with customers to get agreements signed in the coming months.”
In North America and Europe, companies including Google, Amazon and Facebook have PPAs with renewable energy providers that are giving both long-term price security and helping them reach sustainability goals.
“As the third largest wind farm in Australia, Ararat Wind Farm continues to play a major role in producing carbon-free electricity,” Ararat Wind Farm general manager Stuart Liddell said.
“Ararat Wind Farm is pleased to announce this PPA with Flow Power that will directly benefit the local and regional economy by helping businesses keep costs down while procuring secure, reliable and green power”.