Australians get 'more for less' with load flexibility

The energy market in Australia is rapidly changing with the uptake of renewables. Energy providers increasingly offer corporate renewable Power Purchase Agreements (PPAs), contracts with a fixed or capped price attached to set rates of demand and supply; while Australian energy market institutions have made it easier for consumers to access load flexibility, the amount customers can exceed or fall short of their contracted energy volume before incurring penalties.

In More for less: how businesses can flex their energy to get more from a Renewable PPA, a new report for energy retailer Flow Power, ISF researchers find that businesses that strongly match their contracted energy volume can save between eight to 10 per cent on their energy bills. The report goes on to explore the ways that energy consumers might modify their energy use and tailor their PPA to meet their specific energy needs.

Lead author of the report and ISF Research Director Dani Alexander says, “This research shows that there are substantial monetary and decarbonisation benefits available to businesses today if they ‘flex their energy’ to use more renewables and take advantage of new market mechanisms.”

Mapping three different PPA journeys

For this piece of work, ISF researchers chose three businesses with active PPAs for in-depth case studies:

• The City of Sydney, who signed a PPA with Flow Power in 2019 and has tailored their PPA to meet their specific energy needs, such as using wind-generated power to fuel streetlights at night.
• AGRANA Fruit Australia, a manufacturer of fruit-based products located on the NSW Central Coast that has a combined wind and solar PPA with wholesale price access.
• Producer of wine and spirits Pernod Ricard, who has accessed wholesale pricing since the company signed a PPA in 2016 and has since installed an onsite solar system and innovative ice storage system.

Because they are at different stages in their energy journey, these three examples clearly illustrate the way that businesses can progressively unlock greater cost and decarbonisation benefits as their energy literacy improves.

Key findings

Three key lessons were shared across the case studies:

1. Demand matching a renewable PPA is the least-cost and lowest-risk way to ‘use’ more renewable energy. Strong matching (neither exceeding nor falling short of the contracted energy volume) increases the certainty of electricity prices for the business.
2. You don’t need to switch off your business: there are lots of low-risk options to flex energy at a business site. In particular, dispatching onsite generation or rescheduling non-critical processes (e.g. wastewater treatment) are easy to activate and have little to no impact on the core business of the organisation. New technologies, including energy storage and enabling, will further increase the number of low-risk load flexibility opportunities.
3. More market opportunities are emerging that will increase the value of load flexibility in the future. It is likely that energy prices will become even more volatile that offer greater changes for energy arbitrage or, for the more risk-averse, greater benefits from more certain pricing from renewable PPAs. Additional revenue options for load flexibility are also likely to become available through the networks (e.g. Demand Management Incentive Scheme) or wholesale demand response mechanism from later this year.