Photo by Owen Vangioni on Unsplash

An electricity deal struck for both the good of the planet and thousands of residential tenants has been labelled a win-win by academics.

One of Australia’s largest property and strata services organisations PICA Group recently secured what it claims is an industry-first solar energy deal expected to save 64 of their strata buildings an estimated $681,000 annually and reduce carbon emissions. 

At the time of the announcement, the NSW government had declared it would work towards replacing all coal-fired power plants with renewable energy by 2042, a step hailed by Sydney Lord Mayor Clover Moore as “ambitious” and “necessary”. 

“We see this as a big opportunity to make changes,” executive general manager of Business Growth at PICA Group Mark Glass said of both the power purchase agreement and the government’s move to reduce emissions. 

“Owners corporations are becoming increasingly aware of carbon emissions and are motivated to reduce the footprint of their buildings,” added PICA Group chief executive officer Wayne Walker.

“This has certainly been the case among PICA Group customers, whose strata committees we have been working with to reduce costs via NABERS for Apartment Buildings assessments and in key areas such as energy, HVAC and water.” 

For the past three years, the organisation has zeroed in on sustainability measures that drive down the high costs of running their buildings. 

Pools, gyms, elevators and corridors that need to be cooled and kept lit make residential apartment buildings power-hungry “hot spots”, Mr Glass said. 

“But we saw ourselves in a good position to leverage leadership.

“We call it the power of community. I like the idea of aggregation – the ability to put collective volume into a fixed term deal is exciting.” 

Strata buildings collectively encompass around 2.5 million apartments across Australia, according to Mr Walker. 

PICA Group has more than 200,000 lots under management in NSW, Victoria and Queensland across nine strata management businesses, including Dynamic Property Services.

The energy agreement was brokered for the Dynamic Property Services portfolio of strata buildings. It is the first time a strata organisation has created economies of scale to negotiate a low-cost, low-carbon energy deal on behalf of its customer base. 

It is a three-year 100 per cent green solar electricity agreement claiming cheaper rates than any coal-based offer on the market. 

Sourced from two NSW solar farms, Mr Walker said alternative renewable energy sources such as wind, green hydrogen, battery storage and utility-scale renewables across the National Electricity Market could also soon be on the table. 

“The complexity of retail energy deals present challenges for individual strata schemes to obtain competitive offers. With more than 100,000 lots under management in NSW, PICA Group was able to use its size and presence to negotiate the lowest energy rates in the industry,” Mr Walker said. 

“If individual buildings can take steps to go green it could really change the landscape. We started small with a handful of buildings and expanded from there through aggregation,” Mr Glass added.  

Dr Bjorn Sturmberg, a research leader in the Battery Storage and Grid Integration Program at the Australian National University, says that because apartment tenants have largely being locked out of solar opportunities in the past, the deal is a positive step forward. 

“I see this as everyone is a winner. The proposition for tenants is they don’t have to change anything that they are doing, they are just now having their electricity bills reduced and they also get to feel better by having that cheaper power also be cleaner power,” Dr Sturmberg said. 

“For generators, power purchase agreements (PPA) have been really quite an important way to de-risk their investments in their developments. 

“What is happening in that PPA is you’re locking in the rates all the consumers will be paying for that power – that means as a generator you have certainty.” 

Dr Sturmberg, who is also the founder of social enterprise SunTenants, says to date these types of energy deals have largely been driven by governments, despite demand from renters and smaller entities. 

“It is a really great way for consumers of electricity to have a more direct relationship or direct buying power towards renewables rather than just buying from the national electricity market,” he said. 

“PPAs have started to become more accessible to smaller entities and currently the ACT government has been extremely successful with its power purchase agreement. It’s made the Territory powered by 100 per cent renewable electricity and has in the process saved Canberra millions of dollars.”

Last year was a “remarkable” year for the Australian renewable energy industry, according to Clean Energy Council chief executive Kane Thornton, with 2.2 gigawatts of new large-scale renewable generation capacity added to the grid and the rooftop solar industry surging through its third-straight record-breaking year. 

On top of that, the latest data from the Clean Energy Regulator shows total installed rooftop solar capacity reached 12.2 gigawatts nationwide at the end of the third quarter of 2020, with more than 2.56 million solar energy systems installed.

The numbers make a clear case renewable energy is booming in Australia. The Victorian, Queensland and NSW governments have flagged renewable energy zones for regional areas, a growing band of large corporations, including banks and insurers – facing escalating pressure from stakeholders – are backing clean energy, and the Victoria and Queensland governments have jumped on the power purchase agreement bandwagon. 

According to Energetics, a consultancy that has been tracking the uptake of corporate renewable power purchase agreements in Australia, the market has grown considerably from just one deal in 2016, the Victorian government. 

“Corporate PPAs have supported projects with a combined capacity of more than 7500MW, of which nearly ,500MW enabled investment in new projects. After a subdued 2019, we now see 2020 breaking the Australian record,” its report states. 

It can’t be ignored that academics like Dr Dylan McConnell, an energy systems research fellow at the University of Melbourne Climate and Energy College, have flagged a drop in investments in renewable energy by about half a billion dollars this year. 

However, with purchase power agreements becoming more mainstream and de-risking investments in renewables, Dr Sturmberg says there are indications that agreements could expand to include wind energy and even batteries. 

“We’re really starting to see these PPAs be built out more into a complete package of power that is able to deliver to customers either constantly throughout the day or in a shaped manner that matches consumer demands,” he said.