Fourteen Melbourne organisations have banded together to bypass political stagnation on energy policy and procure renewable energy direct from the source – securing price certainty and helping to meet low-carbon goals.
The 10-year power purchase agreement announced on Thursday represents the first time a diverse range of players have come together as a consortium to support the development of a renewable project – an 80-megawatt wind farm near Ararat in regional Victoria, from which the group will purchase 88 gigawatt-hours of electricity a year. This is estimated to abate close to 100,000 tonnes of CO2 a year, and create 140 jobs during construction.
Led by the City of Melbourne, other participants in the Melbourne Renewable Energy Project (MREP) include University of Melbourne, RMIT, Federation Square, City of Port Phillip, City of Yarra, Moreland City Council, Bank Australia, Zoos Victoria, Citywide, National Australia Bank, Australia Post, Melbourne Convention and Exhibition Centre, and NEXTDC.
Energetics provided technical advice, stakeholder education and commercial due diligence on the complex project, which had to balance a range of competing requirements. It called the success of the project a “breakthrough” that could catalyse further agreements.
It has taken three years to come to an agreement, which was announced in November of 2014.
Part of the delay has been developing a contract with the flexibility to meet all of the organisations’ procurement goals and contracting requirements, which Energetics said had been delivered by supplier Pacific Hydro.
“Pacific Hydro demonstrated that they were prepared to think outside the square and look at flexible contracting options,” an Energetics statement said.
“The fact that Pacific Hydro is the preferred supplier shows that ‘tier 2’ retailers can be more than competitive.”
Pacific Hydro general manager Australia Rachel Watson, who is also Clean Energy Council chair, said the company was proud to be involved in the deal.
“This new approach to power purchasing will directly support our development of the project and marks a significant point in our shared transition to a cleaner energy future,” she said.
MREP leader City of Melbourne will be obtaining 100 per cent of its power needs through the PPA, though other larger organisations are procuring just a portion of their energy, using the MREP to test the procurement process in anticipation of further purchases, and to hedge against volatile energy markets.
“We’re sending a message that we’re committed to jobs and investment in regional Australia as well as long-term energy security for Melbourne,” City off Melbourne deputy Lord Mayor Arron Wood said.
“This power purchasing project will be an Australian first. It shows that large organisations can combine their purchasing power to support the development of new renewable energy plants in regional Australia.”
Mr Wood said the model could be replicated across Australia as well as internationally, with the project group releasing a Renewable Energy Procurement guide to help interested parties get set up.
“This project adds to a growing number of organisations and governments going direct to market to purchase renewables, but never before has it been proven that such a large number of partners can come together and make it work.”