With significant customer interest in Virtual Generation Agreements (VGAs), you might also know them as Power Purchasing Agreements (PPAs). Our recent webinar delved into the options and benefits of renewable wholesale solutions.
- A changing market: The energy market has changed dramatically in recent times. Most notably, we’ve seen a 300% price rise over the last two years. Businesses that entered contracts before this price hike are still paying lower rates – but once their contracts expire, this won’t be the case. Therefore, businesses in this position should be considering other options sooner rather than later.
- Missed opportunities: David explained that traditional retailers buy energy from the wholesale market, and on sell to end-customers at a fixed rate. This means customers are missing out on two things: 1) access to the low prices of wholesale market and 2) access to the wholesale energy generation market.
- Flow Power gives you access: Australian businesses can now use output from renewable generators – that is, solar and wind. This means you can now buy at wholesale rates – and save on electricity costs.
- It’s already happening: As Elena explained, many international companies are already using VGAs –without having to change their operations or put anything on their roofs.
How it works in practice
Sarah runs a manufacturing operation in Victoria and uses 15,000 MWh per year.
She is currently negotiating a new contract with her electricity retailer. But she was shocked to hear that she would be looking at a 300% price increase due to the changing market.
She knew that to protect her business’ bottom line, she would have to find another way to buy power.
The diagram below shows Sarah’s power profile over a single day. As you can see, she is constantly using energy throughout the day – similar to the output of a wind farm in Victoria.
Energy from that wind farm can be as cheap as 5-6c/kwh. Sarah could buy 50% of her power from the farm.
On a fixed rate contract, Sarah would be paying $2.025 million a year on energy. But by sourcing half of their power from wind, this could reduce the amount to $1.374 million. And that’s with no change to operations.
What’s more, by locking in a low-cost VGA agreement, Sarah doesn’t have to pay a broker or install anything on her site. She can even on sell power or upgrade her agreement if her business needs change.