Why businesses across Australia and the world are investing in solar

According to sources, international corporations across the globe have doubled their renewable energy capacity investments in 2018 from the previous year.

BloombergNEF (BNEF) has revealed a massive 13.4GW of renewable energy was generated last year, dwarfing 2017’s figure of 6.1GW.

BNEF said 121 corporations over 21 different countries signed clean energy contracts, providing a huge boost for the future of the renewable energy industry.

Over 8.5GW had been ingested by U.S. companies, nearly tripling their signed amount from 2017, while a record 2GW of agreements were confirmed in the Asia-Pacific (APAC) region. Although, the entirety of this amount for the APAC region occurred in just India (1.3GW) and Australia (0.7GW).

This data has been recorded over 2018, with the on-site PPA’s and Australian sleeved PPA’s not included. The APAC number is an estimate, while these details are subject to change with developing information. Source: BloombergNEF.

Why are Power Purchase Agreements important?

As seen in the graph above, Australian sleeved power purchase agreements (PPA) were not included, which then begs the question, what is a PPA and why should you care?

To begin, there are three main types of PPA’s: on-site, direct (aka sleeved or physical) and financial (aka virtual, synthetic or contract for difference).

On-site PPA: On-site PPA’s rely on a developer constructing a facility on the buyer’s property, with the electricity supplied directly to the home or business. The developer will pay for the installation and is responsibilities for its operation and maintenance.

E.g. On-site PPA’s can be hugely beneficial during Australia’s unsteady energy climate, so when a company simply wants a long-term fixed price solution to help manage against future energy fluctuations, this agreement is right for them.

Direct PPA: The seller is responsible for delivering the generated electricity to the purchaser from an off-site facility, regularly through an electricity retailer intercessor. The purchaser will always hold the legal title to the energy in a direct PPA.

E.g. this can be very beneficial to new homes companies can offer residential homeowners or local businesses with a solar power system for a contracted period of say 10 years, at a discounted and rate lower than retail energy.

Financial PPA: In a financial PPA, the buyer pays a fixed price for renewable energy from an off-site facility, but the electricity generator sells the energy on the open market. If the price received is higher than what the buyer has paid, it receives the difference. If the price is lower, then the buyer pays the difference.

E.g. Financial PPA’s can be difficult to navigate, but the offer great potential electricity cost savings with no up-frost capital costs, long-term electricity cost stability and predictability, they enable new renewable electricity projects to be developed and they give the buyer the ability to purchase a large volume of electricity in a single transaction.

According to BNEF’s head of corporate sustainability, Jonas Rooze, clean energy and decarbonisation targets converge with companies’ plans to become more sustainable, while generating great opportunities for the renewable energy industry.

“Corporations have signed contracts to purchase over 32GW of clean power since 2008, an amount comparable to the generation capacity of the Netherlands, with 86% of this activity coming since 2015 and more than 40% in 2018 alone,” Mr. Rooze said.

What if companies look to 100% renewable electricity generation?

With corporations all over the world signing up to implement 100% renewable electricity targets, most are aligning themselves with the RE100 initiative run by The Climate Group in partnership with CDP.

As it stands, 161 companies have signed up with their own 100% targets, in relation to climate change initiatives.

If these companies were to meet their personal targets, they will have to purchase an additional 191 TWh of clean electricity by 2030 (Bloomberg New Energy Finance). But, if these companies were to utilise offsite solar and wind PPAs, an additional estimate of 102 GW of new solar and wind capacity will be generated around the globe.

Is your business ready to upgrade to solar?

To put it simply, of course your business is ready for solar! The solar energy industry has grown exponentially in recent years, with solar system technology performance, energy generation, lifetime warranty and safety all greatly improving, while costs have rapidly declined. Through a highly competitive market, you can get a system four times the size of one a decade ago for a fraction of the price.

To learn more about solar energy systems for your business, call the friendly AICA team now on 1800 242 228 to book a free consultation with one of our renewable energy experts.