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Reported15 power purchase agreements underpin over 77 per cent of the total large-scale renewable project pipeline. Prior to 2017, these agreements were mostly between generators and large retailers or states and territories with their own renewable energy targets. In recent years, small retailers looking to increase their market share, and a growing number of corporations looking to offset their emissions, have actively sought new power purchase agreements.
Figure 3: Types of power purchase agreements supporting new renewables, 2015 to 2019
*Based on the year the power purchase agreement was signed.
Over 500 megawatts of new utility-scale renewable capacity in 2019 was underpinned by large corporations seeking to hedge electricity costs and reduce carbon emissions. The majority of this capacity was signed by supermarket chains with a portfolio of premises across the country. A power purchase agreement is often preferred over installing solar PV systems on individual premises for corporations who do not own their buildings. It removes the complexity and cost of negotiating with multiple landlords. Indications in 2020 suggest a growing subsector of large resource corporations looking to power off-grid mines with renewables either through power purchase agreements or their own installations.
State renewable energy targets also support investment in new renewable energy projects. The Australian Capital Territory commenced a second reverse auction after the success of the first reverse auction in 2015. In Victoria successful projects from the 2018 Renewable Energy Auction Scheme began construction in 2019. Approximately 700 megawatts of the total 886 megawatts contracted is expected to be delivered in 2020.
In 2019, as part of the Powering Queensland plan, the Queensland government established CleanCo. CleanCo is a publicly owned energy retailer in the state that will own, operate and grow the renewable energy assets required to meet their target of 50 per cent renewables by 2030. CleanCo is also responsible for progressing the state’s 400 megawatts of renewables and 100 megawatts of energy storage reverse auction process.
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