Ecogeneration - Article SPPAs & Trade In Green offer
Solar installers pitching for commercial-scale business are often frustrated by how the big guys seem to have the game tied up with power purchase agreements, where payment is packaged as ongoing fees for electricity.
Installers who haven’t got the scale to offer a PPA will feel they are locked out of a whole other world of potential new business.
To renewable energy certificate aggregator Trade in Green it sounded like an opportunity, so the company is offering to become involved as a third party which can step in as system owner so that a PPA can be offered.
“Most of our clients are smaller customers, such as the local electrician who may have solar as part of their business,” says Trade in Green managing director Craig Bathie, “so they’ve had no real opportunity to compete in the PPA market and offer it to their customers, even though they still do get involved in commercial-sized systems.”
Trade in Green’s offer to its installer clients is to step in as asset owner, so that it pays the installer for the supply and install of the system and then sell the energy to the end customer under the PPA, where the end customer is the commercial property owner.
Supply and consumption of renewable energy can be fickle variables, however, so allowances must be made for excesses or deficits in energy supply. “It’s all about system sizing,” Bathie says. The best outcome is that most of the energy generated is used in the property, as the terms of the deal will dictate who owns the surplus.
“It depends on the structure of the deal if there is any exported power on who has the rights to that — it’s either the commercial business owner or Trade in Green, depending on the contract,” he says.
When Bathie spoke to EcoGeneration Trade in Green was still working on its first 30kW system, in Sydney. He says the PPA intermediary arrangement will likely suit systems of about 50kW to 150kW, although anything up to 500kW would be looked at. “It just depends on what deal they’re looking at bringing across the line.”
Because Trade in Green will end up owning the assets it is scrupulous about due diligence, including system design and choice of panels and inverters. “We have input on the specs of the system,” he says, “because we’re the ones who hold the risk.” It relies on relationships with solar engineers and electrical engineers to minimise problems or warranty issues down the track.
Support for the solar industry has been generous by way of government subsidies but it is limited, with the small scale technology certificate (STC) market due to expire in 2030. “That’s why it’s important for us to look at other ways we can help our customers because then it gives us ongoing annuity business as well,” he says.
Will the 2030 deadline also mark the end of life for renewable and environmental aggregators and traders, such as Trade in Green? “It depends on what’s going on in the marketplace,” he says, pointing to state-based energy efficiency schemes such as the Victorian Energy Efficiency Certificates and opportunities in the federal markets.
“From a RET [federal renewable energy target] point of view that market will be gone but it depends on where we are positioned in those other markets. That’s why companies like us will have to look at where our next lot of revenue is going to come from.”
In the meantime, the Victorian energy efficiency (VEEC) and energy savings certificates (ESC) markets are going “gangbusters” as building owners fit LED lighting. “It’s a big job to get accredited under those schemes and then manage the compliance, so that’s where they like to outsource to companies like us,” he says, where Trade in Green will register the installers with regulators, pay them for assigned certificates and then trade them with energy retailers in lots of 5,000.
The secondary markets are active to varying degrees, he says. The Victorian Energy Efficiency Certificates (VEEC) and Energy Saving Certificates (ESC) markets can be illiquid, but the Small-scale Technology Certificates (STC) and Large-scale Generation Certificates (LGC) markets are deep.
“The volumes that are coming through now in the ESC market are making it a little more liquid,” he says. “Over the years we’ve seen it where it might not trade for weeks at a time — it’s trading every day or second day now.”