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MenuSet up a Power Purchasing Agreement
- More renewables
- Self sufficiency
- 1 year
- Varies
What is a Power Purchase Agreement?
A power purchase agreement (or 'PPA') involves an agreement about the electricity you buy from a generator. You will also need a retailer arrangement to manage the times when that generation is not enough for your electricity use.
Power Purchase Agreements are typically with a large or local wind or solar farm, but can be set up for moderate sized solar systems such as rooftop solar on a commercial building. Power Purchase Agreements avoid the up-front cost for your own solar or battery system.
Benefits of setting up a Power Purchase Agreement
PPAs have been used since the beginning of the Australian wind industry to guarantee income to a development, typically for at least 10 years. This gave many projects the financial certainty to proceed. More recently, businesses and governments have started to use PPAs as a way of guaranteeing that their electricity comes from renewable sources.
Some challenges of setting up a Power Purchase Agreement
A community PPA will usually be managed by a retailer. The community support gives the retailer the confidence to offer the renewable project a long term agreement. So an engagement with a retailer will be required as well as modelling of the generation and consumption of energy.
When is setting up a Power Purchase Agreement a good choice?
A long term agreement to purchase and sell energy may be required as part of the community energy project. A PPA has been the preferred method to achieve this for many projects and is a well established and accepted model.
Project examples for Power Purchase Agreements
Sydney Opera House
As part of its long-term environmental sustainability plan, the Opera House was working towards the goal of carbon neutrality. To help meet its objectives, the Opera House set out to find a green energy supplier and made the decision to switch to renewable energy. But solar panels weren’t going to fit onto its iconic sails.
Following a competitive tender, the Sydney Opera House has entered into a seven-year Power Purchase Agreement (PPA) with Flow Power.
https://flowpower.com.au/case_study/sydney-opera-house/
City of Sydney Community PPAs
Schools and apartment buildings are discovering the power in community to get the best renewable energy deals.
Until recently, it was mostly big companies that secured competitive 100% renewable power purchase agreements (PPA).
Now many small to medium sized enterprises, including apartment blocks, are finding ways to purchase 100% renewable electricity.
National strata management company PICA Group and Ascham School in Sydney’s eastern suburbs explain how they negotiated their deals.
NSW Local Councils join forces for PPA
A group of New South Wales local councils have banded together to secure a power procurement agreement with solar-focused electricity retailer Mojo Power that they say will allow them to satisfy the electricity demands of their major infrastructure with 100% renewable energy while providing a path for participants to reduce their overall emissions.
Other guides and resources
Power Purchase Agreements Explained by Flow Power
A great overview of Power Purchase Agreements with some interesting examples.
https://flowpower.com.au/resources/power-purchase-agreements-explained/
Legal Perspective on PPAs
Law Quarter developed this Short Guide to Power Purchase Agreements (PPA) in Australia to examine 3 key issues - What is a PPA, why enter into one, and what is their legal and regulatory environment?
https://lawquarter.com.au/short-guide-power-purchase-agreements-ppa-australia/