Power Purchase Agreements (PPAs) with utility-scale renewable energy plants allow medium to large-scale electricity consumers to meet a proportion of their load demand using renewable electricity. This allows them to reduce their greenhouse gas (GHG) emissions, while at the same time reducing their exposure to volatile and peak prices in the National Electricity Market (NEM).
However, due to the structure of the NEM such agreements must be brokered through a retailer and involve several other parties. Hence, these agreements involve complexity around allocation of the benefits and risk associated with the renewable energy project, and the residual load that must be met via the retailer. There is therefore uncertainty around the financial case for projects, and how this compare to other options such as on-site projects. These conditions create significant barriers to the uptake of renewable energy PPAs.
Once a PPA has been entered into, there is also significant additional complexity for the energy consumer to track and report the financial and environmental outcomes of the project, including carbon certificates, and ensure that the terms of the contract are met.
As a result, UNSW has developed a PPA Tool Set to assist in the creation of cash flow models for Renewable PPAs. The PPA Tool Set consists of four Microsoft Excel workbooks, all of which are available on the Centre for Energy and Environmental Markets’ website.
The Renewable PPA Tool Set is intended to assist large energy users, energy consumers, buyers’ groups and local government to:
- Model Renewable PPAs under different scenarios and conditions, so to assess their financial benefits and risks, and therefore help meeting their renewables and emissions goals
- Assist in the monitoring of Renewable PPAs, to ensure value for energy consumers
This project is supported by the CRC for Low Carbon Living and builds upon previous projects that involved over 50 stakeholder interviews, analysis of market survey data to distil participant drivers and preferences, six project case studies, and two stakeholder engagement workshops.