New era for renewables as first new super peak firming contract signed.
Renewable Energy Hub has completed a landmark 2-year energy deal with Snowy Hydro to supply energy during the high-priced morning and evening shoulder periods, when household demand is high but rooftop solar production is low.
It’s the first transaction of Renewable Energy Hub’s new ‘super peak’ electricity contract and involves Snowy Hydro selling a 25MW contract in calendar 2021 and 2022. What makes this contract different is it covers only the high-demand hours of the morning, afternoon and evening periods.
Renewable Energy Hub’s Head of Markets Chris Halliwell said these ‘super peak’ periods are becoming more pronounced in the National Electricity Market (NEM) as solar suppresses net demand and prices during the middle of the day, only for demand and prices to ramp up rapidly as the sun sets.
“This new hedge contract enables market participants to manage the risk of very high prices during these periods,” said Mr Halliwell.
“Importantly, it also gives renewable energy generators like Snowy Hydro access to new markets, and encourages new forms of supply into the grid to improve energy security”
Cameron Fisher, General Manager of Trading at Snowy Hydro said as the energy market transitions to more renewables, there is a growing need for new hedging instruments backed by on-demand energy resources such as hydro and batteries.
“The super peak products are a natural fit for Snowy Hydro and complement the existing firming products we are offering to both the wholesale and large customer markets,” Mr Fisher said.
The deal comes after Renewable Energy Hub secured backing from the Australian Renewable Energy Agency (ARENA) in January to build a new digital marketplace and innovative hedging contracts for clean energy technologies, such as the super peak contract.
The firming market platform will for the first time support clean energy projects, large energy users and wholesale energy market participants to access to innovative technology specific contracts.
The super peak contract, ideal for pumped hydro, batteries and other forms of flexible peaking generation, is one of a number of new standardised contract types that will be offered through Renewable Energy Hub’s online platform.
The online market platform supporting these new solutions will provide data and tools to facilitate price discovery, support the evaluation of PPAs and contracting options, and recognises the unique requirements of contracting and procuring variable renewable energy.
The market for financial products that manage the risk in the Australian energy system is estimated to be worth $26 billion a year, almost $10 billion more than the actual energy market itself. Products such as swaps, caps and options are key tools in helping energy buyers and sellers manage their risk and provide a stable price to customers. Yet this market has not evolved to embrace the new requirements of clean generation and emerging technologies in Australia.
“This new marketplace will facilitate trade in contracts that reflect the ‘profile’ of renewable generation, filling a gap in risk solutions and creating price efficiency to unlock more clean energy technology,” said Mr Halliwell.
“Importantly, this new marketplace with contracts such as the super peak will ‘firm up’ Australia’s rapidly-growing fleet of renewables by enabling generators, retailers and large energy users managing their PPAs to trade fixed volumes of clean energy out into the future.”
The growth in these new kinds of financial products, including the super peak swap, will provide new incentives for market players to seek out assets – such as batteries, hydro power and other ‘balancing’ resources that can firm up the intermittency of renewables.
“This effectively turns a financial firming solution into a physical firming solution, hastening the arrival of those storage and other balancing resources required to help the energy system make the required transition to 100 per cent renewables,” said Halliwell.
“Snowy Hydro is always looking for new ways to deliver greater value to our customers and help underpin the energy transition occurring in the market. Being involved in the first trade of the super peak contract enables us to utilise our existing hydro assets, providing the on-demand renewable energy needed to firm up intermittent energy sources.” Mr Fisher said.
If you are interested in further information on the Super Peak contract or other Renewable Energy Hub transaction services, please get in touch - email@example.com