XXXX! Lion solar deal to slash energy costs for hundreds of pubs

More than 300 pubs across New South Wales and the ACT will achieve significant savings on energy costs and secure a supply of renewable energy, in innovative group power purchase agreement between venues and energy giant Engie.

Under the partnership between Lion Breweries, the Australian Hotels Association, Tourism Accommodation Australia and Engie’s retailer subsidiary Simply Energy, the hotels, pubs and breweries will secure a supply of renewable energy at a price significantly cheaper than current wholesale electricity spot prices.

By securing an agreement to purchase electricity directly from new renewable energy projects, the venues and brewers will be able to bypass the wholesale electricity market, while also helping to reduce their carbon footprint.

The deal will cover hundreds of pubs and hotels spread across the NSW and ACT region, as well as the Lion owned Tooheys brewery in the Sydney suburb of Lidcombe, with Lion acting as the anchor partner in the deal.

The deal will directly support the construction of a new renewable energy project, underwriting the construction of Engie’s 120MW Silverleaf Solar Farm, set to be built in Narrabri in regional New South Wales.

The deal is one of the largest aggregated power purchase agreements reached in Australia and will cover the purchase of electricity and renewable energy certificates,. By aggregating the demand for electricity from such a large number of venues, the partnership has been able to secure supply from a new large-scale solar farm being developed by Engie.

“It’s typically only the largest industrial energy users who are able to enter into these arrangements with enough load to underwrite new investments in renewable energy at low prices,” Engie Australia CEO Augustin Honorat said.

“This arrangement is designed to combine the retail load of hundreds of hotels and pubs, offering potential savings compared to their existing deals, greater price certainty for 10 years and a link to renewable energy supply to support the energy transition.”

The deal will lock in wholesale electricity prices for the venues at $69 per MWh for the next ten years, representing a significant saving on current wholesale electricity prices which have traded above $85 per MWh for the last couple of years, before retailer margins are included.

“We are pooling our energy needs in the state, which includes our largest brewery Tooheys, together with the needs of participating NSW hotels. In 2020, this will see a typical hotel’s energy price drop from 11.5c per kWh to 6.9c per kWh – a 40 per cent saving, equating to around $18,000 a year,” Lion managing director James Brindley said.

“Our customers are at the heart of this project, and Lion is focused on helping hotels right across NSW thrive. Like all businesses, pubs are feeling the pinch of rising energy costs.”

“In addition to striking a better deal for many hotels in NSW and the ACT, this aggregated PPA will allow Lion to reduce its carbon emissions in the state of NSW by 40 per cent,” Brindley added.

The deal was facilitated by consultancy Clean Energy Strategies, which issued a request for tender to secure a supply of renewable energy, receiving a flood of proposals from 54 generators.

Renewables have proven popular amongst beer producers who have embraced solar and wind power as positive contributions to their brands. It is part of a wider trend towards corporate power purchase agreements, with large corporate energy users finding it commercially attractive to underwrite new renewable energy projects that can effectively shield the companies from rising electricity prices.

In June, brewer XXXX, which is owned by the Lion group, announced its own commitment to renewables, installing 690kW of solar directly on the XXXX brewery in Brisbane.

Last month, Victoria Bitter revealed that it was going to power its operations with renewable energy, making the announcement via a characteristically VB advertisement.

American producer of Budweiser, the Anheuser-Busch company announced last year that it had placed an order for 800 hydrogen fuelled trucks to add to its distribution network.

Michael Mazengarb

Michael Mazengarb is a journalist with RenewEconomy, based in Sydney. Before joining RenewEconomy, Michael worked in the renewable energy sector for more than a decade.