“After the success of the Emerald PPA, we understood pain points and how best to help other organisations on this journey,” says Telstra Energy Head, James Gerraty.
“We wanted to share our expertise to help the sector transition from talk to action and ultimately achieve a better commercial outcome for all involved.”
3. Negotiate, negotiate, negotiate.
Led by Telstra, key features of the group’s negotiations with the wind farm owners included:
- Energy buyers paying a fixed electricity price throughout contract life;
- Telstra Energy responsible for large-scale generation certificates, (a form of “green product”) creation and transfer to buyers;
- identical contract terms for each buyer, save for volume of energy and LGCs purchased;
- structure enables financial hedging for buyers against retail electricity prices.
Macquarie Capital Division Director, Infrastructure, Utilities and Renewables, Kirsten Hannan says the ability to rapidly and successfully conclude the negotiations was made possible by having a small group of high quality and outcomes-focused organisations represented by a single point of contact.
RES Australia CEO, Matt Rebbeck says the innovative approach of the consortium has resulted in a landmark transaction in the Australian renewable energy market.
“As well as reducing energy costs, the project will provide significant environmental benefits and substantial support to the local community and regional economy.”
4. Find in-house sponsors.
Asking executives or boards to agree to a fixed electricity cost over 6-12 years when there is so much market uncertainty is not always easy so recruiting effective and trusted in-house sponsors is a better way forward.
It’s important to ensure sponsors are engaged throughout the process so they can confidently express the risks and benefits of the PPA at critical moments.
“We saw the PPA as a solution that balances energy affordability with a good environmental and community outcome,” says Coca Cola Amatil Head of Procurement, Michael Haynes.