Imagine powering your organisation with clean, renewable energy while keeping costs under control. Well, a Solar Power Purchase Agreement (PPA) could help you achieve that.
A Solar PPA is a long-term contract allowing your business to procure electricity directly from a renewable power generator. This can consist of solar energy generated from on-site panels or offsite grid connected solar farms. This allows solar to be purchased as a commodity at a relatively low generation cost compared to forward energy market prices.
There are many different types of Solar PPAs–which I’ll discuss a little later in this article–so you can choose which type works best for your organisation.
Types of Solar PPAs
There are many different types of Solar PPAs, so you can choose which type works best for your organisation.
On-site PPAs
Commercial Solar PPA: This contract typically lasts 15 to 20 years and requires no upfront investment from you. The solar company takes care of everything—from designing and financing to building, operating, and maintaining the solar system at your site. You simply pay a fixed rate per kWh for the electricity generated, which is usually lower than the rates from the grid. This arrangement helps you reduce your reliance on carbon-intensive energy sources, maximise energy savings, and gain better control over your costs.
Private Wire PPA: Similar to the Commercial Solar PPA, this type utilises ground-mounted solar panels installed on nearby land. Electricity is transmitted directly to your site through a “private wire.” Like the Commercial PPA, it typically lasts 15 to 20 years and allows you to decrease your reliance on grid power while cutting costs and carbon emissions.
Off-site PPAs
Offsite PPAs are sourced from grid-scale generation assets, commonly categorised as “sleeved” or “virtual” PPAs. They offer several advantages over onsite PPAs:
The solar system can be built in optimal locations, ensuring higher efficiency.
Energy purchase amounts aren’t limited by your site’s capacity.
Contracts can be flexible, adapting to multiple sites or relocating if necessary.
Sleeved PPAs: Also known as corporate PPAs, these agreements involve you, an energy retailer, and an offsite renewable generation source. Typically, they are take-or-pay contracts, where you commit to purchasing a fixed volume of energy at a predetermined price. The retailer takes delivery of the renewable energy and incorporates it into your supply contract, often allowing up to 70% of your demand to be met by renewable sources. These contracts can range from 10 to 20 years, with shorter terms usually carrying a premium.
Virtual PPAs: Virtual PPAs, or synthetic PPAs, are structured as contracts-for-difference. They include a strike price for the generated electricity; if market prices fall below this price, you pay the generator the difference, and vice versa. This structure offers flexibility in the amount and location of energy supplied and can support multi-site models.
The New Zealand Energy Market
In New Zealand, the energy market is largely shaped by a handful of key players, with Contact, Genesis, Mercury, and Meridian accounting for around 90% of the electricity supply. This has historically limited options for large businesses seeking to secure energy directly from generators, as most businesses are seen as too small for generators to take notice. As a result, they have to deal with retailers where the cost of generation is defined by the market.
However, a wave of independent renewable energy companies is shaking things up. Collaborations like the recent partnerships between Ryman Healthcare, Mercury, and Solar Bay, or The Warehouse Group and Lodestone Energy, or Inghams and Lodestone Energy, are paving the way for organisations like yours to lock in long-term contracts at competitive rates.
How Total Utilities Can Help
Total Utilities offers PPA consultation services as part of our broader energy procurement solutions. As an independent advisor, we assess a wide range of options without bias, ensuring that we recommend the most suitable PPA strategy for your organisation.
To learn more about investing in an onsite or offsite Solar PPA, speak to our experts today.
New Zealand businesses are grappling with skyrocketing costs and energy inefficiencies in today’s turbulent market. But there’s good news on the horizon—hydro storage has surged significantly in the last week, offering a welcome shift.
At Total Utilities, we’ve teamed up with Panoramic Power to provide innovative solutions that help you take advantage of these changes and optimise your energy management.
Panoramic Power delivers a comprehensive, cloud-based energy management solution with mobile app access, offering the most cost-effective option on the market. With rapid ROI and customisable dashboards and reports, it’s tailored to meet your unique needs.
Let’s take a look at some of the key benefits of our powerful energy intelligence solution:
1. Illuminate and Eliminate Energy Waste
Many businesses are unaware of where they use energy within their plant or facility as utility bills don’t provide information relative to opening hours or production runs. Plus the data on the invoice is looking in the rear view mirror. Panoramic Power’s advanced monitoring technology provides real-time data relative to production schedules and operating hours to easily highlight the cost of energy waste.
2. Upgrade to Real-Time Energy Intelligence
Traditional energy monitoring often falls short as it cannot measure key devices and equipment. Our solution offers real-time insights into every piece of equipment, allowing you to monitor performance and prevent unnecessary downtime. You can track the hours your equipment runs, and immediately identify if it starts drawing more current than is expected. This allows for preventative maintenance and a proactive approach that ensures any issues are detected and resolved before they impact your operations.
3. Capitalise on Energy-Saving Opportunities
Missing out on energy-saving opportunities can be costly. Panoramic Power’s system sends timely alerts about potential savings and efficiency improvements, enabling you to act swiftly and reduce your energy costs. Stay ahead of the curve and maximise every opportunity to cut costs!
4. Implement Comprehensive Business Cases to Drive Change
One of the biggest stumbling blocks to implementing energy savings measures is inadequate data to build a comprehensive business case. Our continuous monitoring provides in-depth analysis of device level energy usage and cost, ensuring you have a complete understanding of your equipment’s running costs. This enables you to make informed decisions to enhance efficiency.
5. Address Minor Inefficiencies Before They Escalate
Small inefficiencies can accumulate and lead to significant costs. Panoramic Power helps you pinpoint and address these issues early, preventing them from becoming major problems and ensuring ongoing cost savings.
Why Total Utilities and Panoramic Power Are Your Partners in Innovation
At Total Utilities, we’re committed to finding innovative ways to help businesses like yours tackle rising energy costs. Our partnership with Panoramic Power offers you access to state-of-the-art energy intelligence technology that provides actionable insights and drives energy cost savings.
Ready to bring Energy Savings to light?
Take control of your energy costs with Total Utilities and Panoramic Power. Reach out to us today to discover how our advanced solutions can transform your energy management strategy and deliver substantial savings.
📩 Contact us now to explore how we can help you navigate the challenges of rising energy costs and implement effective, innovative solutions.
Richard Gardiner, Founder & Chairman of the Board at Total Utilities, shares his insights on the unfolding energy crisis in New Zealand. With years of industry experience, Richard delves into the causes, consequences, and future implications of this pressing issue.
Until six years ago NZ, was in the happy position of being self-sufficient for its electricity, natural gas, and LPG requirements.
Our electricity supply was already 80% to 85% renewable, based on a combination of hydroelectric, geothermal, solar, and wind power-based generation. An enviable position in an increasingly volatile world!
We were self-sufficient for our natural gas requirements too.
Overall, we were also self-sufficient when it came to LPG supplies – a net exporter for +/- six months of the year and a net importer for the rest of the year.
Seven years ago, the incoming Labour/Green Government banned all new offshore oil and gas exploration.
The background to this initiative is that political parties ranging from the Greens to ACT, all recognise that NZ is facing an ‘energy trilemma’. This trilemma centres on:
Sustainability considerations – decarbonisation in a climate change impacted world
Price and affordability considerations
Security of supply considerations
While the political parties disagree regarding the importance attached to specific components of the energy trilemma, they all agree that all three are vital to the wellbeing of our country.
Well-intentioned though the gas exploration ban may have been, its practical impact backfired badly on all three elements of the trilemma:
Sustainability negatively impacted – gas supplies already reduced by over a third with the resultant need that additional coal had to be imported for electricity generation at Huntly. Coal emits nearly twice as much carbon as natural gas on a kWh-for-kWh of energy delivered basis.
Electricity and natural gas wholesale and retail prices have rocketed, especially for time of use (TOU) business users.
While the four wholesale divisions of the big generator/retailers (gentailers) are making excellent profits, their retail divisions are not. Neither are the retail businesses of their smaller competitors like Electric Kiwi.
Security of supply considerations – the Winstone Pulp International example during the past week says it all as do the recent occasions when electricity supplies were very tight nationally. This should not happen in a First World country.
Compounding the above problems is the fact that:
Competition has largely collapsed in the current natural gas market. Amongst other things, previous major suppliers like Contact and Ongas have exited the market. Because of this, the option of importing liquified natural gas (LNG) is now being considered.
With LPG, an announcement during the past month confirmed that one of the major LPG suppliers is selling its LPG division to a competitor. Furthermore, as we are no longer self-sufficient for LPG supplies, NZ customers will be more exposed to international LPG price hikes, based on changes in the Saudi Aramco index and fluctuations in the NZD:USD exchange rate.
The implications of the above include:
Electricity and gas procurement is no longer a one-off exercise every two or three years. It is an ongoing process.
The contract review process needs to start much earlier, in terms of existing contract expiry dates, than used to be the case.
Merely signing a new three-year Supply Agreement is not necessarily the best thing to do now.
Opportunities may exist for a short-term supply arrangement to ‘buy time’ for signing up to a longer-term Supply Agreement, as and when a suitable opportunity occurs in the market.
With hydro-electricity accounting for 60% plus of total national electricity generation and our hydro-electric dams only having six or seven weeks storage capacity cover, there is always going to be a degree of volatility in our electricity supply. But this volatility has been significantly compounded since 2017 by our reduced fossil fuel-based generation and inadequate replacement renewable-based generation to ‘plug the gap’.
The bottom-line for electricity and natural gas/LPG business customers is that they need to adapt to the reality of drastically increased prices, tight supply and generally adverse market conditions.
Please contact us if you have any questions on the above.
New Zealand’s energy landscape is facing a perfect storm. With hydro storage at historic lows and natural gas production declining, energy prices are surging. As we turn to costly imported coal, the impact on electricity costs is significant. In the following article, Total Utilities Director Chris Hargreaves delves into these challenges and their implications for our energy future.
The New Zealand Electricity market relies heavily on hydroelectricity, which accounts for approximately 60% of total generation in most years. This is supplemented by other baseload generation sources that are available 24/7, including geothermal, natural gas and coal.
Despite New Zealand’s significant hydroelectric capacity, our water storage is limited, usually providing only six weeks of coverage, and often dropping below 30 days during winter. To address this, natural gas and coal are used to manage water storage and provide a top up to meet energy demand.
From a hydro storage perspective, May 2024 was the driest on record. And as of 22/07, total water storage has fallen to 31% of total capacity, which is around 55% of average levels for this time of year. In addition to this, our domestic production of natural gas has been steadily falling since 2018, meaning that natural gas is used less and less for electricity generation.
Why is this important? Because if natural gas is not available, we have to use coal. This carries a much higher marginal cost as we import coal from Indonesia, and costs associated with the emissions trading scheme are much higher than natural gas (for further insights on gas production and consumption and historical electricity risk curves check out Gas Industry Co and the Electricity Authority).
The Coal Cost Dilemma
While you might say, ‘great, we have an alternative fuel source to keep the lights on,’ the downside of using coal is that it sets the price of the electricity wholesale market and drives forward retail energy contract pricing higher for large commercial and industrial customers. Lower priced forms of electricity generation such as hydroelectricity then carry a scarcity premium as demand remains strong in a time when supply is extremely constrained.
The Electricity Authority has for several years stated that we have a competitive retail market environment. As of June 2024, there are 47 electricity trading companies in the New Zealand market. Most of these only supply residential customers or are extremely niche players supplying few electricity connections.
Big Four’s Influence: Market Control and Pricing
There are four major generators in New Zealand: Contact Energy, Genesis Energy, Mercury Energy and Meridian Energy (the big four). These four together produce about 90% of New Zealand’s electricity and supply around 80% of the retail market. They hold significant power( no pun intended!) in dictating terms to smaller independent retailers that do not have generation assets.
These independent retailers face challenges in securing competitive prices for upstream energy hedging to offer their customers. They must also meet substantial prudential cover requirements with the market, which increases with rising wholesale prices. This often means that when wholesale prices escalate, the independent generators are unable to quote pricing to customers as they cannot cover prudential requirements, or they are unable to buy upstream hedging. In essence, the big four can dictate how big the independent retailers get by the way that generation supply is managed.
Over the last 10 years, New Zealand’s baseload generation capacity has declined. Genesis has mothballed part of Huntly power station, which can run on either natural gas or coal. Contact has decommissioned the gas fired generator at Otahuhu B and is now using the gas-fired baseload component of Stratford very sparingly. Similarly, Mercury has decommissioned the gas-fired Southdown power station in Penrose.
New generation has been extremely slow to come into the market, with generators blaming the uncertainty surrounding Tiwai, which has resulted in systemic price increases. This has led to Transpower issuing warnings for the last three winters that electricity generation is struggling to meet demand. The result of this was a blackout in Hamilton during 2021 and a near miss, this year.
Although wind and solar projects are increasing, their intermittent nature fails to provide the continuous coverage needed during dry years, leaving a gap created by the reduced gas supply.
The infrastructure commission states that we have a major deficit and that to meet forecast demand, generation needs to more than double over the next 30 years. This is going to cost a significant amount of money when energy prices are at record highs which businesses are already struggling to absorb. Read ‘How is our infrastructure tracking,’ by the New Zealand Infrastructure Commission to find out more on this.
Coal will also be required in greater quantities and for much longer due to the forecast shortfall in gas production over the next 3 years.
MBIE markets manager Mike Hayward says,“New Zealand has used around 150 PJ of natural gas per year for the last two years. While New Zealand holds 8.7 years of natural gas in usable reserves, field operators only expect to extract up to 140 PJ each year for the next three years.” See this MBIE report for further details.
In 2017, we were procuring five-year fixed price contracts for large industrial customers at around $75/mWh (7.5c/kWh). Pricing obtained last week averaged $170/mWh for the period 01 Jan 2025 to 31 Dec 2029.
Investment Incentives: Why New Projects Are Stalled
However, with four major generator retailers controlling the delivery of significant new generation, there’s little incentive for them to invest in new projects. Instead, they continue to profit from long-paid-off assets.
Until competition emerges in the generation market, I struggle to see how the Electricity Authority can stand behind their claims of a competitive electricity sector.
Act Now: Contact Total Utilities
Navigate the changing energy landscape with confidence. Contact Total Utilities to explore customised solutions and implement an energy management plan today!
Is your current utility contract about to expire? Are you tempted to leave it until the last minute and see what the market has to offer? This could be a high-risk strategy for your business according to Total Utilities’ Director, Chris Hargreaves.
Chris explains, “Allowing your utility contract to expire or putting off securing a new contract until the last minute is not generally advisable, and can leave your business exposed to unnecessary risks and higher costs.”
The Risks of Waiting Too Long
“Waiting too long can lead to significantly higher utility pricing. Electricity prices are extremely volatile due to short-term issues such as hydro storage, so timing the negotiation of your contract plays a key role in the price that you get.
“Delaying until the last minute can leave you with fewer options and less favourable terms,” warns Chris.
“By acting early, you give yourself the best chance to negotiate terms that are advantageous for your business and to avoid any disruptions in service or unexpected cost increases.
“Waste contracts, in particular, are often very one-sided in favour of the supplier. If notice is not given within the applicable timeframes, rollover clauses could lock you into a new term with unfavourable conditions,” he adds.
Strategic planning and expert advice can help ensure you make the most informed decision for your utility procurement.
“I would suggest customers look at pricing around six months prior to their contract end date. That way, if a good offer is made, you can accept it. If not, you have time to review the market again before your contract ends. At the very least you will get a view on where prices are at, allowing you to budget accordingly,” explains Chris.
Choosing the Optimal Contract Term
The optimal term for your electricity, natural gas, LPG, and trade waste supply agreements depend on various factors, including market conditions and your business objectives.
“Longer-term contracts can provide price stability and potentially lower rates, while shorter-term agreements offer flexibility and the ability to adapt to changing market dynamics. However, these often come with higher costs and more risk that if market conditions don’t improve, you could pay more again in one or two years.”
Total Utilities procures a range of contract terms from suppliers and provides recommendations that weigh up short contract terms and long term price security with current market realities. Our goal is to ensure your utility contracts align with your business strategy and market conditions.
Shop Around
In addition to acting early, shopping around and comparing different offers is essential. “The utility market is competitive, and prices can vary significantly between providers,” Chris explains.
“By comparing offers, you can keep your current supplier honest and evaluate how their renewal offer stacks up in the market. At Total Utilities, we help our clients navigate this process to ensure they secure the most favourable deals.”
Proactive Procurement is Crucial
Total Utilities provides bundled procurement services with utility cost, consumption and carbon reporting. Even if you are currently in a fixed-term contract, becoming a Utility Insights client allows us to strike when opportunities arise in the market.
Total Utilities can assist you with:
– Proactive procurement: Timing is everything, and acting fast can mean better pricing.
– Identifying areas for potential savings: Regular tracking can reveal inefficiencies & opportunities for cost reduction.
– Predicting future utility needs: Accurate data helps in forecasting and planning.
– Improving operational processes: Reducing overhead expenses through better utility management.
– Preventing wastage: Avoid excessive utility usage.
– Establishing valuable metrics: Communicate utility usage effectively throughout your organisation.
– Making informed business decisions: Precise reporting supports strategic planning.
“Tracking these costs is not just about current savings but also about preparing for future needs and improving overall operational efficiency,” notes Chris.
Why Choose Total Utilities?
Total Utilities specialises in energy, gas, and waste procurement, leveraging over two decades of experience.
“We complete around 300 market reviews each year, closely monitoring market movements, government policies, and industry trends. This expertise allows us to provide informed and strategic advice tailored to your business needs,” says Chris.
“Our services are designed to help businesses like yours optimise their utility costs while ensuring reliable and efficient procurement. From contract negotiation to ongoing cost management, we offer comprehensive support,” he adds.
Find out more
– For personalised advice on your utility contracts or to explore our comprehensive utility management services, contact Total Utilities today.
Ready for cost-saving solutions? Hear directly from Joanne Gleeson, Office Support Manager at Rinnai NZ, as she shares how Total Utilities Management Group has streamlined contract negotiations and reduced costs for their utility needs since 2012.
‘Total Utilities has been assisting Rinnai NZ in negotiating our electricity/gas (both Natural and LPG) contracts since 2012.
Lately they have also assisted in re-negotiating our waste management contract and this is expected to greatly reduce costs going forward.
Service we receive from Chris Hargreaves, Linda MacIver, and all the team is efficient and professional. It simplifies the process of re-negotiating fresh contracts in an everchanging market. The fee structure Total Utilities offers has flexible options to suit.
The whole process is conducted in a most time manner, from the reminder of terminating contracts coming up, through to receiving the recommendations for renewal.
The contracts provided are clearly tabled and with detailed supporting narrative for us to consider and make the best decisions.
Total Utilities then liaises to assist in the changeover to the new provider and minimises any disruption to our business. The new contract signed by both parties is forwarded to me for reference.
I recommend their expertise to anyone looking to secure utilities contracts that offer the best fit for a company.’
Joanne Gleeson, Rinnai NZ
Rinnai is a market leader in New Zealand, supplying high-quality home heating, heat pumps, water heating, and commercial heating and cooling products.
Contact Total Utilities to find out how we can help your business cut utility costs and create a more sustainable future.
