Australian companies are turning in droves to corporate power purchase agreements to reduce energy costs, with the Asia-Pacific region now the fastest growing market globally.
The concept originated in the US with companies such as Apple, Google, GM and Nestle signing PPAs directly with new renewable developments at significantly under market rates.
According to Australian wholesale power company Flow Power, Asia-Pacific is the fastest growing market for corporate PPAS and within that Australia is projected to be one of the largest markets.
Currently 98 per cent of our energy load is consumed through fixed contracts where customers pay an average price for peak and off-peak power. The high cost of these contracts is set to incorporate the volatility and uncertainty of the market.
However, with several large solar farms under construction – a potential 5GW in the pipeline – power generated during the middle of the day is likely to become a lot cheaper. And the big three power companies are buying up the load.
Flow Power managing director Matthew van der Linden said for Australian businesses to get access to these low rates, they needed direct access to the generator, which his company was offering to facilitate – one of the only companies to be doing so in the large-scale solar space.
“It’s a way for corporate businesses to enter long-term contracts to buy energy direct from the solar plant itself,” he said. “At the moment the only ones that can really do that successfully are retailers. So we are facilitating that access directly through to the generator for customers.”
WWF-Australia is also helping businesses with its Renewable Energy Buyers’ Forum.
- Also see our ebook Renewable Energy: Joining the Zero Carbon Revolution
Corporate PPAs should enable businesses to access rates as low as 8-10c/kWh for up to 20 years. In contrast, some customers are currently paying 22c/kWh.
Solar minus the panels
Mr van der Linden said large-scale solar was fairly new in the country. However, the company recognised the “massive opportunity” some time ago and has been working with ARENA, the CEFC and other financiers on a model to enable businesses to access lower rates.
“There are solar PPAs that exist for putting solar on your roof,” he said. “But as far as the corporate solar PPA on a larger scale for what we call in-front-of-the-meter solar farms, yes, I believe we’re the only ones doing it.”
The company is calling the concept “solar minus the panels”.
“Most people understand solar, particularly at a business level, to put on your roof,” Mr van der Linden said. “What we’re suggesting is you don’t need to do that. You can get most of the benefits by essentially buying a chunk of a large solar farm that is external to your property.
“You get cost efficiencies of building a much larger farm, which means the output on that farm is a lot cheaper than you would expect. And you don’t have all the hassles of trying to put it on your roof – of roofing, leasing and licensing problems.
“You only have to build one very large plant rather than hundreds of smaller ones.”
Fixing a broken energy market
Mr van der Linden believes the new approach has the potential to fix the broken energy market.
“We are having blackouts in South Australia and there’s a lot of stories about unreliability,” he said. “And the reason there is unreliability is because the generation has changed. You can only operate when the wind is blowing or the sun is shining.
“On the other side of the coin, you have customers that are still fundamentally buying fixed rate contracts across the board. There is no motivation to change your behaviour.
“We are trying to open it up and say, ‘Really the best way to buy is from wholesale, which is actually variable.’ Those businesses can change their behaviour – maybe use more pumping when the sun is shining and shift load around – and start to match the generation output to the consumer’s load.”
Mr van der Linden said it was a very different alternative to pumped hydro and battery storage.
“The first logical step is to actually find out what customers can do first and foremost to change their behaviour,” he said.
“By giving people access to this low-priced energy they will also have the significant benefit that they will change their behaviour in how they use it now, which will help solve the market problem.”
Flow Power is currently signing up customers in NSW, Victoria, Queensland, South Australia and Tasmania that spend $100,000 a year or more on power.
“It really depends on the nature of the business and how they use their power … but it’s not your small mums and dads’ businesses at this stage – as we grow hopefully it will be,” Mr van der Linden said.
Customers should be able to source solar power from early 2018.
“It will depend on which farm we take the output from and also when it comes online so we would expect in the first six months of next year.”
International interest for Aussie HVAC software
South Australian technology company Delft Red Simulation Technology, which has streamlined how HVAC system layouts are designed for homes and businesses, is attracting international demand.
The Plandroid program is a tool designed for HVAC companies, and uses a standard floor plan drawing to create the optimal heating and cooling solution for a property.
The company has more than 350 clients around the globe, including the US and South Africa.
Founder Mike Garrett said international demand for the software had grown over the past year from zero to about 10 per cent of the company’s revenue. He anticipates the business will almost double in size by 2018.
With exports of Plandroid expected to rise significantly in the next year, the business has recently hired a programmer, doubling its capacity.
A push into Europe is planned for the coming months.
“I’ve been talking to people in Europe about reselling the program,” he said. “Ideally someone who knows the market, goes to the trade shows, and can help with the language and localisation for a multi-lingual environment and different legal environment.
“I want to tap into people with existing support.”
The international expansion has occurred organically through word of mouth. Additionally, Australian businesses with overseas offices have installed the program creating awareness.
Delft Red Simulation Technology has created a niche for itself in the domestic and light industrial area.
“If you are talking about HVAC engineers – there are specialist, high-end, technical packages with 3D drawings. They’re very expensive tools,” Mr Garratt said.
“In the domestic side, there are not a lot of competitors. There are some high-end drawing packages but they don’t do calculations or keep track of parts. In the US there are some that do that but they aren’t as graphic or intuitive.
“The thing about Plandroid is it’s a simple, point-and-click, drag-and-drop program that anyone can use – you don’t need to be an engineer to get the right design.”
The software eliminates the need to custom design projects. Users choose from a stock list of items and drag them onto a CAD-style ducting design superimposed over a house plan. Plandroid calculates basic heat loads, the total design cost and creates reports for the customer, installer and supplier.
Mr Garrett said the tool would be beneficial for shopping centres, airports, factories and commercial buildings, but was primarily used for high-end houses.
“In the future you will be able to do solar panel installations, underfloor heating and more electrical designs throughout the house.”