Media Release
Maoneng Australia
Monday, 15 January 2018

 

MAONENG AUSTRALIA GROUP – Sunraysia PPA Update

New South Wales – On 14^th December 2017, Maoneng Australia (Maoneng) entered into a Power Purchase Agreement (PPA) with the University of New South Wales (UNSW). The PPA allows UNSW to achieve its goal of carbon neutrality on energy use by 2020[1] and provides a long-term price hedge against a volatile NSW electricity market.

Maoneng’s Project Finance Director Kevin Chen said the UNSW solar PPA is the first corporate PPA in Australia that involved collaboration between a renewable energy developer (Maoneng) and a gentailer (Origin Energy) in delivering a joint solution that meets the customer’s needs.

UNSW has set a goal to achieve carbon neutrality on energy use by 2020. Over a six-month period, Maoneng and Origin Energy (Origin) worked closely together in developing an energy procurement solution that meets UNSW’s needs. Consequently, UNSW entered into a PPA with Maoneng for the supply of up to ~124,000 MWh of renewable energy per annum for 15 years. Maoneng will commence generation of this energy in 2019, putting UNSW on the path to achieving their goal. UNSW also entered into a three-year retail firming contract with Origin to manage the intermittency of solar production.

To date, the absence of a coordinated approach between the customer, the retailer and renewable energy developer has led to a lacklustre corporate PPA market in Australia. In addition, the hesitancy to collaborate and share information between parties have added to the challenge.

“By collaborating with Origin and UNSW and maintaining an open dialogue, we have created a corporate PPA template that we believe not only works for UNSW, but can be replicated and tailored to fulfil the specific needs of each customer,” said Kevin Chen.

“In 2018, we look forward to accelerating the advent of corporate PPA activity in Australia by working with other interested customers.”

 

Combating energy uncertainty

In our last update, we discussed the importance of having a financial instrument that provides certainty in revenue and cash flow to secure financing for building solar farms. In this update, we will discuss one example of such a financial instrument, the corporate PPA.

Electricity retailers typically offer one to three year electricity supply agreements to corporate customers. Under this structure, there is no direct relationship between the project and the customer. This arrangement is illustrated below.

 

Alternatively, the corporate customer may procure energy directly from a project, either through a physical transfer of power or via a financial derivatives contract. Such an arrangement provides corporate customers with an opportunity to hedge against the volatility in electricity market and price risk.

Corporate PPA in the form of a financial derivatives contract – ‘a virtual PPA’ – does not require the power plant to be built on-site (but typically need to be in the same state). It can provide the customer with access to competitive LGC pricing and saving on retail prices. An example of a virtual PPA arrangement is illustrated below.

 

Interested customers can contact an experienced energy consultant and/or legal counsel to assist in the structuring of the corporate PPA. These parties will be well positioned to assess the risks and benefits associated with a corporate PPA and structure the PPA in a manner that satisfies the customer’s needs.

 

More about the Sunraysia Solar Farm

The development of Sunraysia Solar Farm was first announced in May 2016, with the receipt of the Secretary’s Environmental Assessment Requirements in June 2016. Following six months of land, site, technical and grid interconnection feasibility studies, an Environmental Impact Statement (EIS) was submitted in February 2017. Incorporating stakeholder comments and inputs, the Sunraysia Solar Farm was approved for construction in July 2017.

The Sunraysia Solar Farm project will be underpinned by the UNSW PPA and one of the AGL PPAs. On 7^th December 2017, Maoneng entered into a PPA with AGL Energy to supply up to 800,000 MWh of renewable energy per annum for 15 years, a portion of which will be allocated towards the Sunraysia Solar Farm. On 14^th December 2017, Sunraysia Solar Farm entered into a PPA with UNSW to supply up to ~124,000 MWh of renewable energy per annum for 15 years. King & Wood Mallesons acted for Maoneng on the AGL PPAs and Clifford Chance advised Maoneng on the UNSW PPA.

Sunraysia Solar Farm entered into a Memorandum of Understanding (MOU) with Decmil Australia for the Engineering, Procurement and Construction of the solar farm with construction expecting to commence in Q2 2018.

Rothschild has been appointed as Maoneng’s Financial Advisor. Investor relations and lender enquiries should be directed to Rothschild’s representative on the following page.

 

ENDS

[1] By offsetting their energy scope 1 and 2 emissions as defined by the National Greenhouse and Energy Reporting Scheme (NGERS)

For further information please contact:

Kevin Chen
Director, Project Finance and M&A – Maoneng Group
M +61 429 833 791
E [email protected]

Simon Barnes
Director – Rothschild

M +61 419 120 249
E [email protected]

About Maoneng Group

Maoneng Group [“Maoneng”] is an Australian-Chinese developer, owner and operator of renewable power generation assets.
Maoneng has a development pipeline of 500MW of solar farms within Australia and sells energy and large-scale generation certificates [“LGCs”] to Australian businesses and governments through a combination of medium and long-term contracts.
Maoneng commissioned a 13MW solar farm developed under the ACT Government’s Reverse Solar Auction scheme in November 2016.
For further information please visit our website: www.maoneng.co

Media Release
Maoneng Australia
Saturday, 9 December 2017

 

MAONENG AUSTRALIA GROUP – Portfolio Update

New South Wales – Maoneng Australia [“Maoneng”], one of Australia’s leading solar PV developer and owner of renewable energy assets is expanding its NSW portfolio after securing key contracts with one of Australia’s largest electricity retailer – AGL Energy.

On 7th December 2017, Maoneng entered into a power purchase agreement with AGL Energy [“AGL”] to supply up to 800,000 MWh of renewable energy per annum for 15 years.

Maoneng’s Vice President Qiao Nan Han said the AGL contract, which underpins 300MW of solar PV power plants in NSW, is the largest solar energy supply contract ever signed in Australia.
The contracts will underpin at least two major solar farms in NSW, including the Sunraysia Solar Farm in Balranald.

“The Sunraysia Solar Farm will be the first of several solar farms which Maoneng will work with AGL to develop. We are pleased to have entered into a contract with AGL that provides certainty for renewables development and energy security,” said Qiao Nan Han.

The balance of the AGL contract will be allocated to the next most suitable project within Maoneng’s development portfolio in NSW. Maoneng will also consider the acquisition of suitable shovel ready projects.

“In the absence of bankable PPAs during a period of political uncertainty, we believe that the AGL contract sets us apart from the market. The second project underpinned by the AGL contract, the Midgar Solar Project, demonstrates our continuous efforts to transition Australia out of fossil fuel dependency. We remain committed to making a difference in the energy sector, one solar panel at a time,” said Qiao Nan Han.

Certainty and Energy Prices

Solar PV power plants are typically financed based on the certainty of revenue and cashflow. This can be achieved through a financial instrument between a buyer and a seller of renewable energy. The instrument provides the certainty that a fixed price for energy is agreed between the two parties for a long period of time. Once such an agreement is in place, the power plant will then have the certainty of revenue and cashflow required to be project financed by banks under a low risk investment regime.

Unlike fossil fuel generators which operate based on the periodic consumption of fossil fuels, renewable energy generators are designed and built with their lifetime supply of “renewable fuel” on day one. This in turn means that renewable energy generators tend to require large capital investments as they have up to 30 years of fuel installed in one go. The large upfront investment is typically amortised over a long period of time by banks and investors.

In a politically uncertain market, it is difficult for both buyers and sellers to put a value on renewable energy (or energy in general). This will typically lead to energy supply issues – especially amidst imminent closures of existing power plants. As the National Electricity Market (NEM) fundamentally operates on supply and demand, a lack of supply of energy will immediately translate to a higher cost of energy – which has been exhibited in the past few years and for the foreseeable period.

The cost of energy at any point throughout the day is determined by a bid stack. The stack is comprised of generators who are bidding to supply energy for any given period. Only the lowest cost generators which bid into the stack can dispatch and sell their electricity, but the price for which the entire volume is sold is determined by the highest price of the bid stack. As renewable energy continues to replace base load (such as coal), it is also critical to have economic peaking power plants that can finish the bid stack with competitive pricing. In the short term, gas will continue to play a critical role to compliment renewable energy, but it will only be a matter of time before large batteries start taking over that role.

More about the Sunraysia Solar Farm

The development of Sunraysia Solar Farm was first announced in May 2016, with the receipt of the Secretary’s Environmental Assessment Requirements in June 2016. Following six months of land, site, technical and grid interconnection feasibility studies, an Environmental Impact Statement [“EIS”] was submitted in February 2017. Incorporating stakeholder comments and inputs, the SSF was approved for construction in July 2017.

Sunraysia Solar Farm entered into a Memorandum of Understanding [“MOU”] with Decmil Australia for the Engineering, Procurement and Construction of the solar farm with construction expecting to commence in Q2 2018.

Rothschild has been appointed as Maoneng’s Financial Advisor. Investor Relations and lender enquiries should be directed to Rothschild’s representative on the following page.

ENDS

For further information please contact:

Qiao Nan Han
Vice President – Maoneng Group
M +61 428 275 150
E [email protected]

Simon Barnes
Director – Rothschild
M +61 419 120 249
E [email protected]

 

About Maoneng Group
Maoneng Group [“Maoneng”] is an Australian-Chinese developer, owner and operator of renewable power generation assets.
Maoneng has a development pipeline of 500MW of solar farms within Australia and sells Energy and Large-scale Generation Certificates [“LGCs”] to Australian businesses and Governments through a combination of medium and long-term contracts. Maoneng commissioned a 13MW solar farm developed under the ACT Government’s
Reverse Solar Auction scheme in November 2016.

For further information please visit our website: www.maoneng.co

Media Release
Maoneng Australia
Friday, 23 June 2017

SUNRAYSIA SOLAR FARM – DEVELOPMENT CONSENT

New South Wales – On 20th June 2017, the Sunraysia Solar Farm [“SSF”] was approved under Part 4 of the Environmental and Planning and Assessment Act 1979 by Executive Director David Kitto, Resources and Assessments and Business Systems, as delegate for the Minister for Planning.

SSF is a 200MW AC solar photovoltaic power plant and the largest solar farm in New South Wales [“NSW”] to have obtained planning approval.

Maoneng’s Vice President, Qiao Nan Han, said, “I am pleased with the determination as it is a clear indication of the project’s quality, with timing impeccably aligned with the NSW Government’s ambition of transitioning to a net-zero emissions society by 2050.”

The solar farm, to be built near Balranald in western NSW, is one of the sunniest parts of NSW where the region currently thrives on dry-land and irrigated agricultural production of grains, wool, sheep meat and beef. Increased tourism, facilitated by developments such as SSF, are envisaged to add to the current economic drivers for the Balranald Shire.

“Our focus on developing the latest in solar power generation technology with energy storage and local tourism exhibitions would complement both the Shire and the State’s objectives.” Qiao Nan Han adds.

As part of local community involvement and support, Maoneng has committed an annual tertiary scholarship for 10 years for up to three students per year valued at approximately $10,000 per student. The scholarships are dedicated to Balranald Central School students and forms an important part of the school’s stage 6/HSC reforms.
Balranald Central School’s Principal, Aaron Flagg, said, “This is exciting news for our school community. Maoneng is genuinely interested in growing Balranald’s future. This is best demonstrated by our educational and corporate partnership. Having a huge economic development such as SSF on our door step will present many other educational opportunities over time for our students and our school’s future.”
“Education is a fundamental pillar of society which underpins the prosperity of our future generations. We are committed to this region through our long term planning in bringing a sustainable future.” Qiao Nan Han adds.

The development was first announced in May 2016 followed by receipt of the Secretary’s Environmental Assessment Requirements in June 2016. Following six months of land, site, technical and grid interconnection feasibility studies, an Environmental Impact Statement [“EIS”] was submitted in February 2017. Incorporating stakeholder comments and inputs, the SSF has now been approved for construction.

“The development approval will be followed by further consultation with various stakeholders in developing detailed construction management plans. This process will run in parallel to our current contractor selection process to ensure that all conditions of consent are correctly adhered to. We are looking to start construction by the end of the year with an anticipated construction period of 12 months. If all goes well, SSF will be playing a large part in meeting the summer demand of 2018/19. Up to 250 jobs would be created within the Sunraysia region, where the project would be staffed by a mix of regional, national and international skill force, across the planning, finance, legal, engineering/design and construction industries.”

SSF is anticipated to generate approximately 530,000 MWh of electricity per year where the energy would be transmitted via Transgrid’s transmission lines throughout NSW and Victoria.

“This development will play a large part in off-setting some of the recent closures of thermal generators within the region as well as bringing opportunities for those looking to transition from fossil fuels into the renewable energy sector. Once completed, the solar farm, together with other solar farms, will be monitored and remotely operated out of Sydney. We intend to retain the relevant local staff to assist with the day-to-day operations and maintenance of the asset, once construction is completed.”

For further information please contact:

Qiao Nan Han
Vice President
M +61 428 275 150
E [email protected]

Kevin Chen
Director – Project Finance and M&A
M +61 429 833 791
E [email protected]

Michael Tran
Project Manager
M +61 425 431 899
E [email protected]

About Maoneng Group
Maoneng Group [“Maoneng”] is an Australian-Chinese developer, owner and operator of renewable power generation assets.
Maoneng has a development pipeline of 500MW of solar farms within Australia and sells Energy and Large-scale Generation Certificates [“LGCs”] to Australian businesses and Governments through a combination of medium and long-term contracts. Maoneng commissioned a 13MW solar farm developed under the ACT Government’s
Reverse Solar Auction scheme in November 2016.

For further information please visit our website: www.maoneng.co