On 9 October, 100% Renewables in conjunction with our partner organisation Sourced Energy presented to a group of NSW Government representatives on Sourcing Renewable Energy, using the example of Eurobodalla Shire Council’s Renewable Energy Options Analysis. The presentation was also broadcast via a webinar to NSW Councils participating in OEH’s Sustainability Advantage program.
About Eurobodalla Council’s renewable energy goals
Eurobodalla Council has a goal to source 100% of its electricity from renewables by 2030 as per its Emission Reduction Plan 2017-2021. The plan also has two additional goals to reduce emissions by 25% by 2020 and by 80% by 2030 for council operations.
With a strong track record of carbon abatement, Eurobodalla Council has already reduced its emissions by 35%. Despite the target of 100% renewable energy being 12 years away, Eurobodalla Council wanted to look at their options now, for a number of reasons:
- Council is coming off its electricity contract at the end of 2018 and faces much higher prices
- Some councillors and the community were interested in the recent developments in local government-owned solar farms, like the ones by Newcastle and the Sunshine Coast councils
- Recent developments in renewable Power Purchase Agreements (PPAs), like the SSROC PPA
- Council had also received an offer from a private developer for a Public-Private Partnership (PPP) and another offer for a Virtual Generation Agreement via a PPA.
With several offers on the table and given the uncertainty and volatility in the energy market, Eurobodalla wanted to get independent, expert advice on the viability of these options. They selected 100% Renewables and partner organisation Sourced Energy to help them navigate the options and put recommendations forward.
Renewable energy options assessment
100% Renewables performed an analysis of three different business cases:
- Build and own a ~10 MW solar farm in the LGA
- Co-invest in a 30 MW solar farm via a Public Private Partnership
- Contract directly via a Power Purchase Agreement
We evaluated each option in terms of how well it was able to meet the objectives of ‘cost’, meaning achieving the same or lower than grid price, ‘sustainability’, meaning the need to achieve a 100% renewables goal, and ‘risk’, meaning the reduction of risk to an acceptable level.
For all of the options considered, a major factor limiting Eurobodalla – and other councils – from sourcing 100% renewables cost effectively is a ministerial order that prevents councils from entering into “contracts for difference”, a contracting method that underpins many ‘corporate PPAs’ in the market. In effect, this means that all options must consider Council’s load and timing of energy demand, and look to sculpt solutions that align with this demand while managing differences between renewable energy generation and demand via load balancing strategies.
Our analysis found that in the current environment, a PPA is the lowest-risk and easiest-to-implement option for Eurobodalla Council, but sourcing 100% renewables is unlikely to be feasible at this time. Council should seek to incorporate the purchase of large-scale renewable energy from the start of the next electricity contract period using a shorter-term agreement where it is found to be financially viable and has no additional risk when compared to a regular retail contract.
Council should also consider forming a buying group or partnering with other councils in the region or state to increase the size of the electricity (including renewable energy) load to be contracted and to increase the attractiveness of the opportunity to retailers, potentially leading to lower cost outcomes.
The build options evaluated offer a fairly low return in the short term, require substantial upfront investment and carry some delivery risk. The current uncertain policy environment plays an important part in this outcome, particularly for mid-sized projects. At this time, build options for Council should be a lower priority for investment, but can and should be re-visited as build and implementation costs reduce further and the policy environment changes.
While in the case of Eurobodalla Shire Council, the ‘build’ case was only marginal, your situation might be different. If you are unsure as to whether you should ‘build’ or ‘buy’, please call/email Barbara or Patrick for an informal chat.
Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.”