Power Purchase Agreements
Power Purchase Agreement (PPA), also known as ‘behind the meter’ PPAs, are a contract between two parties, which enables individuals to generate electricity from renewable sources and sell it to a purchaser, usually a local utility. PPAs are an effective method to boost and increase the commercialisation of clean energy.
Solar PPA is a financial agreement that benefits individuals who wish to obtain a Photovoltaic (PV) system with no upfront cost. During the contract, the customer will be able to purchase energy not generated by their system from the local provider at a rate lower than that offered to the general public and have their PV system maintained by the installer. At the end of the agreement, the PV system will be automatically transferred to the customer’s name.
Advantages:
- No upfront cost
- Fixed electricity pricing at a lower rate
- Installer responsible for the maintenance
- Environmentally friendly and sustainable
- Potential increase in property value
- Support clean energy market
- Ownership can be transferred in case of change of property ownership
Disadvantages:
- Interest fees may be applicable
- Not feasible for short term tenants or rentals
- Requires a detailed understanding of cost and Energy Certificates
- Potential for minimum design input – contract dependant
- Requires detailed understanding of trade-offs related to Renewable Energy Certificates (REC) ownership and feed in tariffs
- Difficulty or hassles associated with contract negotiation
Selling Renewable Energy
Steps to Establish to Source
Prior to installation:
- Ensure that the system is properly installed by an Electrician accredited by the Clean Energy Council. Accredited Electricians will be able to provide verification of this.
- Ensure that the materials being used comply with the Clean Energy Council accredited components. Labels will be identifiable on accredited products.
- Ensure that the system/installation procedure meets the Australian and New Zealand standards. The Electrician will be able to provide details of the conformance.
All of the aforementioned requirements can be confirmed through the following documentation, and should be kept for submission when creating your account with the REC Registry:
- A copy of the installer’s Clean Energy Council accreditation
- A document that proves the system was installed according to the Australian and New Zealand standards, for example, Certificate of Compliance, Installation Report and Electrician’s Licence
Register a Small Scale Technology or Large Scale Generation account in the REC Registry.
Small-Scale Technology Certificates (STCs) and Large-Scale Generation Certificates (LGCs) will be added into customer’s REC Registry account.
Renewable Energy Certificates (RECs)
RECs are automatically generated from renewable energy sources and can be classified in two categories:
Large- Scale Generation Certificates (LGCs) – One LGC corresponds to 1 MWh (megawatt hour) of renewable energy produced from large scale solar farms, wind turbines, hydro or geothermal energy.
Small-Scale Technology Certificates (STCs) – One STC corresponds to 1MWh of renewable energy produced by small photovoltaic, hydro and wind systems. It also includes energy obtained from solar water heaters or air source heat pumps.
Selling Small-Scale Technology Certificate
Feed-in Tariff
Feed-in Tariff is a government incentive to establish small scale systems by paying for the excess energy produced from small-scale PV systems and feeding it back into the electrical grid.
How to apply for a Feed-in Tariff
- Own a grid-connected PV
- Enter into an agreement with an energy retailer (as detailed above) to obtain the feed-in tariff
Check out current feed-in tariffs at Solar Choice.
Trading STCs
Feed-in Tariffs pay for the excess of energy produced from small-scale renewable technologies, such as PV, wind and hydro systems that is fed into the main grid. Furthermore, small-scale technologies generate STCs that can be traded through either the Open STC Market or STC Clearing House.
Open STC Market Features
- The market is controlled by multiple bodies.
- Agreement and transaction is directly between the buyer and seller. The Clean Energy Regulator is not involved
- Prices are likely to vary depending as the market value changes.
Selling your STCs through Open STC Market
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The price is negotiable, quantity and payment methods are decided by REC traders or STC traders. Buyers are usually electricity retailers, who specialise in the management of STCs.
- This form of trading requires a written contract between the two parties
STC Clearing House Features
- This trading method is controlled by the Clean Energy Regulator
- The Clearing House Transfer List was created to link the STCs directly to the buyers
- The price is fixed at $40/STC (excluding GST)
- There is no external negotiation between sellers and buyers with fixed pricing
- No guaranteed purchase of STCs with the Clearing House trading system
- Payment is made by direct deposit into the sellers’ STC Clearing House account
Selling your STCs through STC Clearing House
- Register your STCs with the REC Registry
- Apply for Access to STC Clearing House in REC Registry
Selling Large Generation Certificates
Basic Step to sell LGCs
- Search for an appropriate registered LGC trader, individual or an energy retailer to purchase your LGCs
- Discuss quantity, price and payment method direct with your customer
- Create a legal agreement with your buyer for the acquisition of your LGCs. Note that the negotiation and payment are unrelated to the REC Registry.
- Transference of the LGCs into buyer’s REC Registry account