NSW manufacturer taps renewables, demand response, in major wind and solar deal

The Australian arm of global industrial products manufacturer Molycop has signed a renewable energy off-take deal to source more than half of its NSW electricity needs from locally generated solar and wind power.

The power purchase agreement with specialist retailer Flow Power is underpinned by off-take deals with the under construction Bomen Solar Farm and the operational Sapphire Wind Farm, both located in regional NSW.

In a statement on Monday, Molycop said the 10-year deal would supply an estimated 100,000MWh per year of clean energy, covering more than half of the company’s NSW electricity consumption, and making it one of the biggest buyers of renewables in Australia.

The company – which manufactures and supplies steel-based products and services to the mining and rail transport industries – said the PPA marked the start of a new chapter for the business.

“This agreement is an important milestone for Molycop,” said the company’s Australasia president, Michael Parker.

“It not only provides strong support to Australia’s pipeline of renewable energy infrastructure projects that will also benefit the wider community, but also enables us to gain greater control over volatile energy costs.

“From a sustainability standpoint, Molycop is not only supporting two important renewable energy projects, but we are further enhancing our credentials as a responsible and sustainable organisation,” Parker said.

The 170MW Sapphire wind farm is located near Glen Innes in northern NSW (Barnaby Joyce’s electorate) and is mostly contracted to the ACT government, as part of its own 100 per cent renewable target for 2020.

The wind farm is owned by Grassroots Renewable Energy, a partnership between CWP Renewables and Partners Group. Flow earlier this year contracted to take the output for 50MW of capacity, presumably to put together a deal like this.

The 100MW Bomen solar farm – located near Wagga Wagga in the electorate of Joyce’s successor as National Party leader, Michael McCormack – was developed by Renew Estate and recently bought by Spark Infrastructure , and has also contracted a large part of its capacity to Westpac, as part of that bank’s own commitment to 100 per cent renewables.

Both projects were also recently contracted – via Flow – to supply 16GWh a year of renewable energy for the state’s iconic Sydney Opera House, to help cut its $2.5 million annual electricity bill.

Interestingly, Molycorp noted that one of the key reasons it decided to partner with Flow Power on the PPA was to gain access to the ARENA Demand Response program, as well as Flow’s renewables sourcing and forecasting expertise.

As Giles Parkinson reported here, the Australian Energy Market Commission in July released draft proposals to allow major energy users – like smelters and refineries – to more easily be paid for reducing demand on the power system, which currently relies only on rarely-used but usually horribly expensive “peaking” generators to be switched on to meet demand peaks.

The market reform on DR has been regarded as equally significant to the recent decision to switch the settlement periods from 30 minutes to 5 minutes, another rule change designed to address market rorts by the incumbent generation fleet and to encourage technologies such as DR and battery storage.

In the lead-up to this rule change, Flow Power has been at the forefront of Australian DR demonstrations, including leading one of 10 pilot projects that make up an ARENA and AEMO backed three-year trial, in place since late 2017.