We want to support our large commercial customers with their decarbonisation goals. Power Purchase Agreements (PPAs) and Sleeving are two ways that the market is making it easier for new renewable electricity generation to be built, and for customers to access a reliable supply while maintaining certainty of cost.
A PPA (Power Purchase Agreement) is an electricity supply agreement where a price is agreed for a period of supply, avoiding the volatility risk of buying and selling on the wholesale energy market (where the price moves around depending on current and forecast supply and demand). We have PPAs with some of our larger customers to support their decarbonisation goals, which are becoming more common as the focus on decarbonisation continues to grow.
Example: Amazon (April 2023)
A long-term PPA was agreed with Amazon for purchase of renewable energy for their planned Auckland data centres. Amazon will purchase around half the real time output of Turitea South (the southern section of the Turitea wind farm).
Mercury has a strong pipeline of renewable development opportunities, having a customer that is able to buy a significant amount of Turitea South’s generation means that we remain well positioned to continue developing renewable projects at pace.
There can be PPAs outright to underwrite our power stations or wind farms (Mercury sells the electricity it generates) or a PPA/Sleeve (Mercury buys PPA and sells fixed price variable volume - FPVV) to underwrite others’ generation.
Example: Ryman (March 2023)
Mercury is contractually ‘sleeving’ a PPA between our customer, Ryman Healthcare (New Zealand’s largest retirement village operator) and independent energy generator Solar Bay.
Mercury supplies electricity when solar output is low and buys solar output above what the customer needs if output is high, so Ryman gets a reliable supply of power to some of its villages and long-term price certainty.
For example, we have sleeved PPAs for customers who would like to use the output of a solar generator. Through a contractual ‘sleeving’ structure Mercury supplies electricity when solar output is low, and buys solar output above what the customer needs if output is high. The customer gets a reliable supply of power and long-term price certainty through agreements with both the solar generator and Mercury. We acknowledge that smaller, independent generators have a role to play in New Zealand’s renewable energy supply and see potential to support this through collaborative arrangements like these.
ENERGY ATTRIBUTE CERTIFICATES
Energy users are becoming aware of the need to consider and address their Scope 2 carbon emissions, caused through energy they purchase and use. Purchasing low-carbon electricity generated by renewable sources (along with conserving energy and upgrading energy efficiency) is an effective way to reduce Scope 2 emissions.
Energy Attribute Certificates allow our customers to match the amount of electricity they use on an annual basis with an equivalent amount of electricity generated by one of our eligible wind farms.
The New Zealand Energy Certificate System (NZECS) was established in 2019 and enables the transfer of renewable energy production attributes, from zero-carbon and 100% renewable electricity generation, and is built to be compatible with international greenhouse gas reporting standards. Learn more from NZ Energy Certificate System.