The role of Solar Power Purchase Agreements in the road to net zero emissions

Transitioning our energy supply is a key step towards combating climate change, playing a pivotal role in the goal of Net Zero emissions by 2050. In this article we will discuss how our Net Zero ambitions will shape the energy sector and how businesses can be on the front foot, taking advantage of a bright opportunity.

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The Great Shift


As the global community transforms their economies towards the goal of net zero emissions by 2050, leading businesses around the world are taking proactive steps towards a cleaner, more sustainable future. As part of the UN’s Race To Zero, the mission of fully decarbonising our energy systems by 2040 is in full swing. Solar and wind are already the cheapest form of energy in countries covering over 70% of global GDP. The UN has identified supply-side factors, which include manufacturers, producers and food processors to be vital players in decarbonising their economies. Solving the decarbonisation challenge will create economic and societal advantages for the countries, cities and companies who emerge as leaders.


Locally, state governments are also committing to a net zero future. The Victorian Climate Change Act 2017 structures state initiatives to work towards a target of net zero by 2050. All other states across the country have set targets of emissions reductions to net zero by 2050 as well.



The Solar Generation


This great shift towards a more sustainable world has created a significant opportunity for businesses to invest and utilise solar energy. The Australian government has invested over $3 billion in solar energy since 2014, making solar the most publicly funded low emissions technology in the country (Department of Industry, Science, Energy and Resources, 2020).


Figure 1.1 Australian Government investment on low emissions technology (2014-15 to 2019-20), by technology. Source: Department of Industry, Science, Energy and Resources, 2020.



Solar energy generated is expected to surpass coal in 2024, with Solar reaching 26 gigawatts of installed capacity compared to 22GW of coal power in 2025. This tremendous growth will bring an early closure to coal-powered plants. Although beneficial for the planet, early closures may destabilise the energy grid, prompting policy makers, regulators and network owners to rush market reform. “Therefore, there is a need to [..] increase energy diversification, demand-side management, battery storage systems to reduce intermittency, improved power system reliability and resilience using smart grid systems” (Australian Academy of Science, 2021, p.58).



The Cost of Solar


Despite significant reductions in the price of solar technology throughout the supply chain, there are still considerable initial and ongoing costs involved with a solar system buyout, especially for small and medium sized businesses. Additionally, the aforementioned early closures of coal fired power plants and a policy vacuum addressing solar power integration had led to uncertainty amongst solar investors in regard to grid regulation and return on investment (PV Magazine, 2020).



A Bright Alternative


For small and medium sized businesses wanting to take proactive steps towards a greener net zero economy, the current and future state of the energy market along with the substantial cost of going solar may be a bridge too far. Perhaps the economic impact of COVID-19 is still felt and influencing on day to day business decisions.


Fortunately for these businesses, there are alternatives available on the market that avoids the costs and uncertainties present in the energy market. Solar PPA (Power Purchase Agreements) are growing in popularity across the business sector, with more and more businesses being attracted to the prospect of cheaper, cleaner and easier electricity. Solar PPAs provide clients with a predictable low energy cost over the contracted period as well as consistent maintenance of the system to maximise efficiency.


Energy Terrain’s Solar PPA can help businesses transition their energy supply to sustainable and affordable solar energy without the heavy initial investment and ongoing maintenance costs. Energy Terrain’s clients are also entitled to government incentives, renewable energy credits and, when excess energy is generated by the PV system, it can be sold to licensed retailers back into the grid, offsetting a portion of the service rates.


Conclusion


Interested in joining the community of leading businesses working towards a sustainable net zero Australia? Get in touch with our team to see how Energy Terrain can help your business can smoothly transition to affordable solar energy.





References


Australian Academy of Science, (2021, March). The Risks to Australia of a 3°C Warmer World. Retrieved from www.science.org.au/warmerworld



Department of Industry, Science, Energy and Resources. (2020, December) Australia’s emissions projections 2020. Australian Government [Online]. Retrieved from https://www.industry.gov.au/data-and-publications/australias-emissions-projections-2020#:~:text=Australia%20has%20committed%20to%20reduce,the%20period%202021%20to%202030.



Maisch, M. (2020, 1 Feb). Renewables investment collapses due to network woes and policy uncertainty. PV Magazine. Retrieved from https://www.pv-magazine-australia.com/2020/02/01/renewables-investment-collapses-due-to-network-woes-and-policy-uncertainty/


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