PPAs no longer the exclusive domain of retailers
As electricity prices rise and we move towards a carbon‑constrained future, companies are looking for ways to manage their exposure to changing electricity prices and to purchase electricity from renewable sources. Generators are also looking beyond retailers as potential offtakers to support the development of new renewables facilities. Consequently, over the past year power purchase agreements with corporate offtakers (Corporate PPAs) have become increasingly popular in Australia.
As a leader in renewable energy projects in Australia, Allens has played a significant role acting for offtakers, generators and financiers on some of the largest renewables projects in the country. We are now applying this expertise in the emerging market for Corporate PPAs and have advised on ground‑breaking Corporate PPAs in a variety of different industries that have involved innovative structuring and negotiation of complex key issues.
Covered in the report
- Emerging PPA structures - over the past year, a number of alternative structures for corporate PPAs have emerged in the Australian market. These include buying groups and arrangements which facilitate a fixed quantity uptake (which is challenging for a variable generator) to the offtaker.
- Key issues - There has been a learning curve for generators, financiers and corporates in relation to Corporate PPAs – with all parties having to re-examine previous market practice and understand the commercial drivers of the others to negotiate an outcome that is acceptable to all.
PPA Expertise and experience
Our team has been involved in a number of corporate PPA negotiations, acting for both generators and offtakers and our involvement in acting for clients on Corporate PPAs dates back to advising Tomago Aluminium on its agreement with Macquarie Generation.
We understand the issues that offtakers and banks focus on when negotiating PPAs, and also the key challenges and risks in selling electricity and environmental products produced from renewable energy generators. We also have significant experience in electricity procurement and a thorough understanding of what it takes to develop projects in the renewables sector.