On Friday, July 20, Australian steel manufacturer BlueScope signed a seven-year Power Purchase Agreement (PPA) with ESCO Pacific’s Finley Solar Farm. The deal was coordinated by Schneider Electric.
The direct agreement will enable ESCO Pacific to start building the farm later this year. It will comprise 500,000 solar panels across a 300ha site located 100km west of Albury in NSW, and is expected to be online by mid-2019.
The PPA represents 20 per cent of BlueScope’s total Australian electricity purchases. According to the company, this is the largest corporate offtake agreement with a solar farm to date.
Through the agreement, BlueScope hopes to insulate itself from rising electricity prices.
“Over the last couple of years our electricity costs have more than doubled. They’ve gone up by something like $50 million over the last 12 months or so,” said Bluescope chief executive of steel products John Nowlan. “What we’re trying to do is put downward pressure on our energy costs, and this arrangement helps us to do that. ”
Nowlan added that the PPA reflects BlueScope’s commitment to Australia’s 2030 target of reducing electricity sector emissions by 26 per cent on 2005 levels.
“By investing in solar energy, we are helping accelerate the decarbonisation of the electricity grid by reducing greenhouse gas emissions by around 300,000 tonnes of CO2e each year,” he said. “This is comparable to taking 90,000 cars off the road and is enough to power 60,000 homes.”
The move adds momentum to a growing trend for industrial energy users. Testra, Mars Australia and Equinix have all signed similar direct purchase agreements with renewables developers.
Andrew Thai, Sustainability Manager, Development at Frasers Property Australia, is delivering the keynote address at AIRAH’s Solar Heating and Cooling Forum in Brisbane on August 9. He believes PPAs will become increasingly popular for building developers as well.
“PPAs are probably the most cost-effective way of doing it, rather than doing it piecemeal with an individual system tied to a specific development,” he says. “Essentially a PPA is hedging your bets on the future cost of electricity by locking them in now. You’re reducing your operational energy costs and ticking the sustainability box as well.”