Achieving Net Zero for Energy in 2022
I'm going to introduce myself now.
I'm Edward Hanna and I will be leading this conversation this morning with my two co panelists, Tony Giannikos joining us from energy action, which is where I'm coming from.
And also honoured and blessed to have Jeremy Halstead are joining us from Shell energy in Australia on our call today as well.
Just as people come into the call, I might just move the slide along and I guess just just frame our conversation a little bit today with some observations made by the Secretary-general of the UN very started this month back in early March.
No, there's certainly plenty of food for thought here.
If there's one message Mr Gutierrez is trying to make pretty clear to us all, is that a greater sense of urgency than governments and populations around the world have been able to exhibit thus far is required if we are to limit global warming over the course of this century and beyond.
The other key point that I'd just like to draw your attention to.
I think it's really well made here, the energy transition, which is what we will be discussing this morning is really fundamental to the process of decarbonization the planet and reducing humanity's impact on the planet.
We'll explore that through the course of the morning, as well as a couple of other key ideas for us here in Australia with the support of Tony and Jeremy and yeah, I guess I should pause actually and take a moment to just outline for you all what we expect to be talking to you about this morning.
So actually I'll pause and let Tony do our acknowledgement of country.
Um so yes, of course, in the spirit of reconciliation, energy action acknowledges the traditional custodians of countries throughout Australia and the connections to the land, sea and community.
We pay our respect to the elders, past and present and extend that respect to all Aboriginal and Torres strait islander peoples today.
Many thanks, Tony.
I'm here on Gadigal land here in Sydney and joined by my colleagues in Melbourne.
Yeah, we acknowledge the owners, the indigenous owners of the Australian land.
As we get into the subject matter and introduce ourselves, we should probably offer the other framing device that it's ST Patrick's day today.
Um if you want to grab a Guinness to to celebrate that element of culture, then that's okay with us.
Um look, some of the key ideas that we're gonna work through today, um we really want to talk through how important it is to get the energy grid to net zero.
Um as as soon as we possibly can here in this country, what it means, What are some of the challenges, Jeremy from Shell can step us through some perspectives from not just a really important energy market participant here in Australia, but also from a global perspective as well.
The other key point, key message that we want to bring you in to bring to you today is that the market has solutions now, there are ways that you can achieve Net zero for energy in 2022.
Energy Action is ready to be your partner to help you on that journey.
And Shell two has some great tools, some great services, some great products and is a powerful partner as well, forgetting to net Zero and 2022 or indeed in your own time frame, other key messages, it's the responsibility of us all.
We can't rely just on regulators and suppliers to get us there.
Um it's going to take governments, it's going to take consumers and us as commercial and business consumers to act and make decisions in favor of renewable energy and Net Zero to bring the time frames that mr Gutierrez is making so clear to us to fruition the last key point and we'll get there over the course of this conversation, is that having an informed plan and hopefully we can help you in that respect today.
And the budget is a really important starting point to a strategy and an effective pathway to Net Zero.
So without any further ado if I may quickly introduce myself, my name is Edward Hanna.
I've been in the industry for 25 odd years now and and here at Energy Action, developing products and solutions for our customers for a good portion of that right across the I guess the consumer end of the energy value chain.
So working in market based solutions, working through data solutions, working in energy efficiency, working in microgrids and it's with great pleasure that I introduce Tony john a kiss as well.
Yes my name is Tony Giannikos's.
I've I've been in the energy industry now for just just on 10 years.
Um I work as a business development manager here and um I guess my job here working closely with our clients is to simplify um what people such as Edward and Jeremy bring to the table.
The energy industry can be very complex which you will find throughout the course of this.
Um, this webinar, however, I will try to simplify it where I can and bringing to life scenarios of how these solutions work, but also don't work for our clients.
Great and Jeremy, thank you so much for joining us.
Thank you Shell and and thank you Jeremy.
Um yeah, so um you like Albert and Tony have been in the industry for quite some time now, longer than I can't remember frankly and it's a mostly in consulting, looking after a range of functions both in the UK and Australia.
And more recently with Shell Energy and I lead the structure of product sales team which covers off a lot of different products which include the things we will discuss today.
So yes, this is a key area of focus for me.
Great, thank you Jeremy and I should mention upfront that Jeremy is a member of the energy action energy advice diaspora, we did work quite closely a few a number of years ago on the consulting in the client consulting space and it's always a pleasure to speak with you.
And it's a real tribute to Shell's position in the market that you're they're doing great work for them and we really value the relationship we have with but your article and likewise cool.
All right, so look, just to kick off, I wanted just to set a bit of a scene here for us all.
Um we know about net zero.
We know about the some of the key issues around reducing emissions to therefore reduce global warming.
We understand that there are different types of emissions associated with different activities where we really want to focus this conversation today is around the scope two emissions of businesses.
Okay, so that's as energy consumers.
We're really talking about your emissions associated with your grid energy purchases and specifically your electricity purchases.
Okay, so that's the conversation and we're really going to focus and drill down into how do we achieve net zero for energy and specifically electricity.
Why is it so important? Look, it's so important because emissions associated with electricity, we can see on the graph on the bottom left corner of the page here are a substantial portion in their own right of Australia's reported and reportable greenhouse emissions.
There's some fantastic data made available by the Department of Industry and Science.
The websites down in the bottom corner.
I'll mention guys we are recording this session and we'll make both the deck and the recording available and to all attendees following this session.
So I don't feel the need to take notes.
Um, Fantastic Datasets.
They're presented by the Department of Industry and we can see there that in 2021, even after quite a few years now of the decarbonization of the energy grid, that emissions associated with electricity production in Australia represent more than 30% of our total emissions budget more significantly when we look out to the future.
And we'll look at a couple of charts that try and demonstrate this once you think about the solutions to emissions, particularly in the transport sector and some of the stationary industry and industry processing related emissions, a whole lot of those solutions are fundamentally around the substance of the electrification, so substituting gas and oil for electricity over time and therefore getting the grid right, getting the grid to a point where it's highly renewable and its emissions are as low as possible are really critical for Australia and for the world in general to reduce their emissions in Australia.
Indeed, blessed as we are with some space and some sunshine and a bit of wind and water are a really powerful position globally over the next few decades.
If we do get this this transition right, okay.
Um, the looking at the, what's going on from a market perspective before I asked jeremy a couple of questions, We can see there's a couple of different lenses through which we can see what's happening to the decarbonization of the grid.
The first lens there, this is an A.
O forecasting and planning report extract produced earlier this year.
Um, it's telling us that they've got a pretty close eye on how much coal and gas is planned to withdraw from the market over the next few years.
What has been announced as what has not been announced? Um, it's also showing us what has, what's proposed in respect of new solar, new wind, either anticipated, proposed, completed, um, coming in to resolve this problem.
The, when we look at this, certainly when we look at this from outside jeremy, we see a lot of change and disruption ahead of us.
A lot of volatility which will be expressed through pricing hopefully not too much in terms of interrupt ability of the grid, but we also see the need to ensure that the signals are there from consumers to encourage that solar and wind investment as well as the storage and affirming capability to ensure that the colon as coal and gas is withdrawn.
Um, it's taken up there.
There is investment coming in in the firm in the form of other energy systems, energy technologies, I should say, as we jump into this jeremy, can you tell us what this energy transition means for Shell globally and perhaps more importantly here in Australia mm, happy to um so stating the obvious.
But Shell recognizes very much the need to tackle climate change is an urgent challenge.
We, uh, in order to make that happen, we have set out on our own bank.
We have a net zero target and ahead of that we have short and medium term carbon intensity targets, the end goal being to be consistent with the paris agreement and to do a bit to help limit the advertiser temperatures to 1.5 degrees.
Um, our targets also include the energy we sell as well as the energy we produce.
So Michelle is doing its bit to do mm hmm, limit emissions on scope one, scope two and scope three, which is rochelle organizations larger shell that is quite a task, but there is a strong focus on decarbonization and that applies both at the global level and within Australia.
Um, looking at Australia specifically, um, it's a major market for Shell with some significant investment over many, many years.
Um, the reasons that we have invested here as much as we have our, that the restaurant growth in renewables and there's clear customer demand for renewable products and services um, like lots of other countries, but Australia particularly um, the practical application of that is this month we signed agreements with to acquire fortunately percent of West wind, a wind generator, Which they have three gigawatts of projects in the pipeline and it can complement a number of other acquisitions over the last few years.
Talk about your address, carbon, carbon offsetting and renewable generation generally.
So Shell is a heavy investor in Australia and is looking to build on that with the product and services we offer.
So we're going too much into it.
Yes, it is a key focus.
And look, we're obviously in a market in transition and Shell is exposed to markets and investors in markets globally.
We saw the Greenpeace reports early February attempt to rank energy retailers here in Australia by their impact on the environment.
Um, obviously shells an incumbent with a legacy position, but looking to a future that is De-Carbonized.
How do you think buyers should use these ranking systems in their purchasing decisions? So things like the Greenpeace report where they can help consumers make informed choices.
That's just generally helpful and that's, that's a good thing.
Um, the Greenpeace report, I mean, it takes a lot of complex information summarizes it and frankly the way that it is quite thorough and brings it together.
It does mean though it's quite a high level report.
Um, it's from a, from a commercial consumer perspective, it doesn't list of all the retailers that can make office to commercial consumers, there's a bit more focused on residential consumers.
Um, I think as well we can draw the point that it commercial consumers businesses when they're looking at their electricity options, they have a lot more options to consider than would a householder contract would have.
And so what's the report and that kind of report is very useful really getting some specific advice about your circumstances, what products and services to meet your strategy.
That usually is a good idea because it's, you need that more targeted information, I would say.
And in order to help get the right strategy, I would agree.
I'd agree, Jeremy.
And look, the, the DSG sector as a sector is, is very high profile and a lot gets said about the estate sector when we're working through with our clients on making statements in relation to energy and evaluating, um, their suppliers.
You know, we really draw their try and draw their attention to the contract that they're signing.
You know, that that's really the client's investment in the transition and the quality of that contract and what it is saying or presenting representing in regards to emissions reduction from our point of view is much more important than general general observations about a brand, which is not to say that those observations don't have resonance internally with other stakeholders, but on a process to try and educate all of our everybody we're working with.
But it's the contract that matters okay, Jeremy, just as we look at some of the other charts here, I've pulled in some modelling from Chemo in respect of the step change in emissions, some scenario work they've done in their integrated system plan.
Um, you know, the most likely scenario according to Imo's polling of various market pundits is this step change scenario here, right.
Where we get concerted effort from governments, Maybe we get effort from suppliers such as Shell and other investors in the market.
We get effort from regulators and certainly we get the concerted effort of consumers to lead this change.
There's an expectation that driving expectation that emissions will reduce over the next substantially over the next decade.
Um, and on the far right, um, a bit of an exploration to, of what might happen if Australia can successfully navigate.
Not just the electrification of its, of, uh, you know, the emission, sorry, the transport sector and other sectors across our economy, but also, you know, what opportunities present for Australia.
If we can nail the chance to become a hydrogen superpower.
Um, as you're thinking about the needs of your customers over the next 35, 10 years, Jeremy, what risks do you expect them to be exposed to and where do you need to guide, give guidance for your customers as you look out to the future in respect of these changes.
I mean, generally shells perspective as a retail as we would try to minimize the risk to our customers face.
Typically retails from a better position to manage these wholesale risks, but I mean quickly and there's quite a few to run through, but essentially supply-demand is a lot more complex to manage.
Um, the, the switch to more distributed generation, more interconnected grid and more variable generation.
It makes it just a more complex proposition.
There's no other aspects such as the um more complex requirements from consumers to frankly.
And I think we'll come to it shortly and but the change in wholesale prices during the day and other aspects that require more management than grid, he used to, so we're talking in more complex environment with more price, volatility and a range of factors which have not been there before.
And I think, yeah, next slide, if you'd like to.
Yeah, yeah, let's step into that.
Everybody, what I just just drawn in for a bit of discussion here is um, some some cost curves.
These are global average cost curves.
You know, the the concept here is the level is cost of energy, you know, what does it cost once you inject your capital, consider your cost of capital, all of your development costs and then the maintenance on a different generation technologies over the lifecycle of their lifetime of their life.
We've got some charts, charts here which are demonstrating that certainly what we're interested here in Australia, solar photovoltaics and onshore wind.
The cost of generation in U.
Dollars is coming down to less than four cents a kilowatt hour.
So it's becoming very competitive on a unit by unit basis with cole and another certainly coal, which has been the lowest cost of generation here in Australia for many decades.
We're used to seeing that at 4 to 4.5 cents per kilowatt hour.
Generally Jeremy, what do these L C O E charts not tell us what's, what's not here.
The key point is how you firm that into a fixed price essentially.
Um, so yes, well, the cost of generation self can be quite low.
Um, it does not necessarily, if you tell the whole story, if you're taking that energy input, um, and then you're affirming it into a fixed price that we offer retail customers, then you have to add on other costs to do that.
So it's not quite the full picture.
Um, obviously you can use the resources to do it, but yes, you have to present it to the firm price because ultimately that's what consumers will pay.
Um, the, the chart on the right, which looks at operational demand, that not a large part of the story, I would say, which, which is all to do with the, that demand over the course of a day.
And you can clearly see that demand is hollowing out in the middle of the day with morning and evening peaks.
We could relate to solar generation and the prevalence of it both behind the meter people's rooftops and large solar plants themselves.
So what it means is the price distribution during the day is changing quite significantly.
So, um, you have to cover the risk of those morning and evening peaks.
You also need to change the pricing to reflect the lower cost during the middle of the day and also deal with the volatility of those generations don't operate as expected.
So that ties directly into the price volatility that we're seeing and that retailers like Chelsea to manage in giving these prices to customers.
So while we might be able to develop solar developers and the market generally can talk about the lower cost renewable energy.
Once you consider the challenges of firming grid stability and other technical challenges, it's not necessarily the case as we move through this transition that renewable energy in the grid will develop deliver us a lower cost every single day.
No, it's um, it's kind of the declare point that, you know, if it sounds too good to be true, that's generally the case.
So it's, you have to present it as the whole picture and look.
The other key point that I'd like to draw out for our audience here today is when you're looking at your net zero statements and your net zero planning and we're going to move into that section and a little bit by and large, there is an obligation or requirement for you to be able to report measurable, verifiable steps that you've taken to procure renewable energy.
And again, pointing back to, hey, I'm contracted to somebody who's got a big portfolio of renewables doesn't necessarily meet the requirements of the the reporting framework that you, maybe your organization may be looking to report through.
Hence when we come back to the contract that you're signing and specifically we come to the attributes of the, of the renewable energy certificate.
In Australia, the renewable energy certificates are a premium product.
They exist under an act of legislation which puts an obligation on energy sellers such as shall Australia to meet to supply a portion of their own energy that they're selling into the market from renewable energy.
That's the obligation that sets a market price once and and sets a framework for those certificates to be created, surrendered, reported, etcetera.
Um, what we've just like to address, bring your attention to firstly, it's a premium product.
So it's additional to the cost of energy.
Um, and secondly, as we can see from the chart on the right hand side of some wholesale Renewable energy certificates, some large scale generation certificates traded in the market over the last 12 months, we can see the forward prices of certificates moving substantially.
So that dark blue line, March 21 in March 21 we were doing some great work for some of our clients buying them energy certificates at less than $15 a megawatt hour or less than 51.5 cents per kilowatt hour premium In the lead up to cop 26 and a lot of activity here in Australia around the planet by organizations to declare their intent around net zero.
We saw that price really firm.
And head up to 2.5 to 3 cents out to the future.
Um That trend has continued to the point where what we can see in the market at the moment, we are seeing certificates plus four cents, 4.5 cents per kilowatt hour out to the future in the near future.
Okay, jeremy, can you give us a bit of a background, a bit of discussion here as to what's happening underneath those prices? Mm hmm.
Happy to happy to.
So L G C prices um like any other traded commodity, they respond to supply and demand.
Um If you look back over the history of LDCS, they've been pricing has been really quite volatile when the scheme was in the growth phase when it was potentially being um grandfathered.
And then when uh the available generation LDCS inquire meat, meat demand and over the course of the last few years or that's how we proceed.
So anyways moved around a bit.
The the reason most recent common trends you've picked up there early and is the growth involuntary demand that has been the key factor.
And you can quite clearly see it there that you're looking at the March 22 price curve, you've got that the whole forward curve of LDCS has increased, particularly towards the back end of the curve as you get up toward 2030.
So yeah, voluntary demand is perhaps the key factor behind that rising price trend.
Um, mm hmm.
Um, say that Shell, uh, the lawyers would like me to point out that we can't give advice on price trends.
But the supply-demand is the key aspect and The increasing focus from cop 26 and other similar, it seems to really focus people on this has been the key factor behind that rising price.
Yeah, that's right.
And look, we know that there's supply coming into the market, but I think we're seeing a change in, um, strategy from solar developers.
You know, there's less reason for them to sell long with these higher prices.
It's probably more important than ever to be closely monitoring these price curves out to the future to look for opportunities as they evolved through the course of a year, definitely the other one is to keep an eye on regulation because as a highly regulated market, LDCS unfortunately prone to changes in regulation.
That is the other key aspect.
Look, I'm gonna make a few more statements and then I'm going to just try and start to bring Tony into the conversation a little bit, um, Tony I know you like to talk and I've taken the lunch.
Um, what we wanted to step through everybody now is pathways to net zero.
And I guess a couple of motherhood statements to, to get us there right.
Firstly our conversation today is, is restricted to two scope to which is your electricity grid emissions.
So step one in addressing your scope two emissions is really to understand your scope and your baseline.
Um, second step from energy actions point of view is to really be clear about where you're headed.
In respect of your net zero claims and statements.
There are various dimensions to this first and most important probably is the trajectory and time frame that you're looking to establish and when you want to declare that your Net zero.
The other dimension that is really critical is having an awareness across your organization as to what reporting framework you're going to use.
How are you going to substantiate your claims of net zero? How are you going to put your claims of net zero up to scrutiny and allow people to understand what you've done and avoid accusations of mm hmm.
Greenwash the on the right hand side of the chart of the slide here, I've just made a bit of an attempt to lay out some of the different reporting frameworks which are out there which our clients are working through our a 100 a scheme really focused on renewable energy and achieving that 100% renewable energy target the cdp the clean development protocols, science based targets initiatives.
These first three are all international initiatives driven by United Nations and other organizations under their umbrella, which referring back to the greenhouse gas protocol and then more locally a couple of important programs, Green Power, Climate Active and the cert program established under the Anger legislation.
The Australian federal anger legislation.
The key points I wanted to draw out is that all of these frameworks are an interpretation back of the UN's greenhouse gas protocol.
The greenhouse gas protocol has some important things to say about scope two emissions and how to mitigate or a bait them firstly.
And most importantly, they there's a distinction drawn between um an offset and a reduction.
Okay, so a carbon emissions certificate may sorry, the carbon offset, yeah, carbon emissions certificate may offset a ton of carbon related to your scope two emissions.
But these schemes also are interested in how you're actually reducing your scope two emissions.
And there's two standards for two methods for reducing your scope two emissions.
The first, which will focus on today because it is more generally applicable across the market.
Is a market based approach which is really a measure of your purchasing.
What certificates are you purchasing two.
Can you report back through the reporting frameworks to demonstrate that you are procuring renewable energy.
And the second measure more difficult for a lot of organizations to impact directly is the locational method which is looking at the grid in the emissions intensity of the electricity grid in your state, which we know varies from state to state much higher in victoria than it is in South Australia or Tasmania at the moment, just due to the different generation mixes and as a consumer, really the only direct method you can impact that and make a reportable gesture, I suppose a reportable investment is with behind the media renewables.
So typically solar, sometimes a little bit of wind.
So this chart, I really wanted to this table here, just really draw out that for all of the different quality criteria embedded in these reporting frameworks, the L.
The large scale generation certificate meets the criteria of all of the certificates.
Carbon offsets do satisfy the climate active standard to the extent that you can report your gross offsets if you're buying energy including carbon emission offsets.
But renewable energy is reportable under climate active as well as a reduction in your scope two emissions.
Some important distinction there.
Key point here though guys is that setting your timeframe, your target and knowing your desk and your reporting framework is really critical to understanding what sort of budget you're going to need to set To achieve net zero.
Then we need to move in and start thinking about pathways to actually get you renewable energy.
Um, I'm going to throw the concepts in a moment through two Tony um, and jeremy a bit more just to run through some of the solutions that energy action and indeed shall can work with you on um, starting with corporate PPA um solar, we won't spend a lot of time on today.
Behind the meter can be, is it delivers great outcomes as either Opec's or Capex.
If you're careful with those certificates, wholesale progressive purchasing of L.G.C.S
Is a method that we can support you with green power certificates are out there.
They're measuring something slightly different to climate active and the greenhouse gas protocol there's a product energy action supports the renewable energy supply agreement which we want to unpack for you and then indeed carbon neutral supply energy supply so Tony.
Can you can you give us just a quick rundown on how corporate pa works and any advice you may have for buyers looking at those? Yes.
So with the corporate purpose and our clients the way they um look at it.
It's it's a fantastic product that is very powerful.
Um You know I was talking to a client one day and I when we were talking about the powers and perils of a corporate P.P.A
And he said I was being a little bit dramatic with with perils um explaining through the corporate P.P.A
Um you know as fantastic and powerful as it is.
You know you get long term price pricing certainty um and uh you get great provenance with your L.G.C.S
Um The complexities around setting up a P.P.A
The time frames it takes I believe would you keep mentioning that you need to be best friends with your lawyer Because you really need to get a deep understanding of the P.P.A
um and be 100% certain that that is going to work for you.
Um if entered in team correctly, um you know, people can be very detrimental to business, therefore our clients tend to, I won't say avoid a P.P.A
but tend to go for an easier option um in in the long run, would you concur with that view, jeremy, just before we move on? Um Yeah, I would, I think P.P.A
Is well, a the term P.P.A
People use it to imply this generic product frankly.
And as we all know, there isn't, each PPA is distinct, depends on the offer being put forward, the generator, the term, the pricing, the location, lots of things like that.
So they're not, they do take longer, they're more complex and for some consumers that that is entirely appropriate and the kind of way they want to go, I suggest the most energy consumers, they don't really want to take on the kind of wholesale risk and complication that people can bring.
And because fundamentally is not their business to manage wholesale energy risk is not what they want to do.
So they want a solution that matches their profile better and doesn't, you know, ask those difficult questions that you no longer terms or price uncertainty or exposure to derivatives or any of those things.
So both PP is a perfectly valid product, it just has to match what your strategy and what you want to achieve the other very quick point is that from a renewable energy perspective, it's the LDC that matters and you don't have to agree papa to acquire an L.G.C
So if your target is renewable energy acquiring and surrendering the L.G.C
Is the key point and you don't have to greet that complex to achieve it.
Let's use that as a segue to just quickly come into the next offering.
Then the progressive purchasing of those LDCS directly, you know, there's a wholesale market out there, you can take a position.
Um, what Tony.
Where's a, where's a good application for that kind of a product.
Absolutely, Another, another fantastic product.
But another one that you have to really be on top of, um, you know, when, when used correctly, um, you know, spreading the risk of your buying of the buying of energy to make sure you're averaging your prices down.
That's um, that's using progressive purchasing, correct.
Um, you know, the old stock market, buy, buy low, sell high well in this case it's by low, um, you know, Other people might want to sell high to you, but we want you to buy low.
So the, the most important thing here is to make sure that you're working closely with their, with an advisor that you can fully put, you know, 100% trust into um, I would recommend energy action.
Um, it has a big risk if you, if you don't play your cards right.
There's a real big chance of blowing out your budget.
Um, if you don't purchase at the right time, if you don't get in, um, make a decision quickly as the market moves down, you could miss the boat.
Um, You know, we've had, we've had instances where clients have, have not taken our recommendation for whatever reason internally.
Um, and then when they were forced to enter into into a position, um, it was not as favorable as it would have been so, um, being on top of this constantly paying attention, um, making sure you can trust your advisor.
Um, and when they say pull the trigger, make sure you go for it.
And I know that Jeremy has got lots to say to you because I've worked with him closely in these sorts of arrangements in the past, but I'm going to scoot through just watching with an eye on the clock because I want to, I want to scoot past green power.
I want to just, we might even move on beyond this slide.
The renewable energy supply agreement.
Um, it's a, it's powerful product that offers provenance of the certificates, fixed price and I wanted to talk about a deal that an opportunity that we all worked on together, um, Tony brought through a very large victorian client, august last year.
We ran a competition for renewable energy supply agreements amongst, I think six or eight suppliers and Shell in fact was the eventual winner.
I think Jeremy, you had the hand, the pen in your hand to put that bid together for us.
Um, maybe I'll kick off.
It's funny, what can you tell us about this? Um, what the client was looking for and what they got out of this renewable energy supply agreement we put together for them, definitely, definitely.
This, uh, this I might just throw in was one of the biggest highlights of my, my professional career.
Um, this deal, um, you know, when, when Reza renewable energy service agreement was, was announced as, you know, something that we're going to push heavily, Everyone got excited.
Um, and then when we were able to throw it in as an auction as well just to just add in a little bit of the benefit of, you know, competitive tension for our, for the retailers, we thought we've got, we've got a product here, that's, that's going to be great.
We went to this client.
Um, and the first line that we said was what if we told you that you could be zero budget live 22 this was middle of last year.
Um, at that time where the market was, we actually explained that if we get in now you'll actually be able to do this at a cheaper price than what you're currently paying for a non green agreement.
Um, they looked at us in disbelief and said, no, you can't do this.
And we showed them how, um from the point that they pulled that they, that they gave us um permission to go to market.
It took six, maybe seven weeks to go from.
Yes, let's do it too.
We have an agreement ready to go that is 100% green.
Um just it put together all of the benefits of a papa, puts together all of the benefits of the progressive purchasing, but it also just gives you that that peace of mind that you've got a fixed price for your budgets, um and a product that you can report.
Um and he's quite measurable.
So jeremy, we saw thanks, thanks Tony, Jeremy.
We saw a shell compete hard to take this opportunity.
What was the opportunity for Shell? You know, what drove Shell to want to win this business so badly.
So this particular um tender, very closely aligned with the products and services that we're looking to promote essentially.
Um it was under benefits for the Shell really reflect the benefits of the customer um in many ways.
So it's a simple, straightforward process, um which enabled quick decision, it was straightforward for us to manage the risk and complexity of it.
We didn't have to develop very complex terms or indeed ask the customer to understand and process them.
Um it It's an auditable and provable 100% renewable energy arrangement with marketing rights for the renewable generator involved.
And it basically it also reflects the grid works in terms of how electrons move around.
But the MTC is the bit that proves it.
So yes, simple, straightforward, efficient.
It achieves the customers goal.
It ties in with the shells for you to have auditable, sensible and unprovable renewable supply.
And yeah, it worked very smoothly and we were very keen to win.
Look at an interesting point about it too.
I just put in chatter, I believe it's a three year deal.
Is that right? Guys correct in line with the organisation's planning and budgeting processes.
Um another key point, Jeremy, I'm just gonna poke you on this as we as we wind up.
Well away from 2030 2030 is the the endpoint for the great legislation which in terms supports the large scale generation certificate.
Have you got any insight into what might happen to certificates and indeed possess with tenure tenure beyond 2030? Mhm.
Often beyond if they go beyond 2030 would state that the buyer would have green writes whatever they may be.
That's particularly what the P.P.A
Says, not always specifically.
Um what actually happens beyond 2030 at the moment, there's no actual clarity and frankly the red legislation has been such a political poison chalice that I don't think anyone is particularly keen to grasp it particularly not at the moment, pre federal election, but there are some potential instruments they're looking at maybe looking at and part of the world the gardens, but frankly there was no clear guidance and Yeah, it's not a circumcision yet.
And look just to emphasis the dangers or the potential risks, sorry that the clients facing going beyond 2030, I'd just like to draw out that we saw the L.G.C price in Australia right now at about 4.5 cents per kilowatt hour under the emirate legislation and declining down to 2.5 cents or thereabouts In New Zealand at the moment the renewable energy certificate prices about .2 of a cent, You know, it's a factor of 10 cheaper.
So just be aware guys that these regulatory changes can have big impacts as well as the supply, the technology is supporting the market.
Um we're running short of time.
We've got a couple of questions just to wind up the, I guess the key messages we really wanted to leave our audience with today.
And number one, look, the market has solutions now to help you address the challenge of Net zero for energy.
Um, second point, it's really important that you start running conversations in your organization, the price, the cost of certificates in if you want to be reporting through a framework and we can help you with that Third point related to that 2nd 1.
Your destination determines your pathway.
We can get you to net zero, we can get you there in 2025, we can get you there before 2030 or indeed beyond but you need to have a budget, have a strategy and understand your reporting frameworks before you can get into that and last point shells joining us here today, I think to really make the point that buying renewable energy doesn't need to be difficult and the corporate P.
P A is not the only pathway.
There are some other pathways that are really good out there for organizations including our renewable energy supply agreement.
Jazz, is there anything you'd like to just offer in the vein of tips and tricks and sound advice for energy bias as we wind up good old standard comments such as understanding your cyclists, having your consumption needed to hand, having your contracts to hand, having a just a good clear basis of this is my energy portfolio.
Um, and there is always sensible, always the other point we discussed here is relevant to this is before you start diving into product um, that may suit your renewable energy ambitions, understand the public statements and claims that you want to make as an organization.
If you know what claims and statements you want to make and targets you want to hit that makes it significantly easier to understand what products may suit your strategy.
If you, if you look at products first then work out strategy, it's much harder because there's a significant range of products and it usually indiana rather circular point.
So yes claims products and claims and targets you want to do you want to achieve? Look at those first.
Um, to close out then we will take spend a moment on questions, but look just, we will be in touch with all of the attendees.
Thank you, Jeremy and thank you Tony to provide the recording of this session um, as well, Tony and some of his colleagues are going to reach out to offer complimentary renewable energy cost pathway.
You know, this is the starting point for conversation, it's not a proposal or a pitch.
It's helping you understand what's the likely cost of energy, renewable energy.
If you look at it now, what will it be and start that process of when should we start to, when should we be looking in the market for renewable energy And when can we connect you with some of our great partners like Shell Australia.
Um guys, we've gone over time but a couple of questions have come in.
If our audience are willing to stick with us for a few minutes, do you want to, should we have a crack at trying to answer some of those, We might take the most recently, last most recent question last first Gavin.
Thanks for your question.
A three year deal.
We'll have to have that particular client needing to come back into the market in 2025, it's suddenly starting to look really difficult with Australia's largest coal generator Origin Energy announcing its early withdrawal from the market.
How are we going to support that client through that process? Definitely.
It's been a big talking point, the closure of this generator from origin.
So when we, when we completed this still at the time, we, we weren't aware of the fact that there would be a closure of, of such size.
And the deal was made at the time that the market was at its lowest three years.
We had recommended either 36 months or 48 months, client chose 36 months, which is perfectly fine.
Um, on our side of things, the one thing that we do at energy action and and and and our account managers are fantastic added here is making sure that we keep in constant communication with our clients, we will continue to monitor the market.
Um, at the point that we believe it's going to be the right time for this client and any other client as well whose current agreements expire in 2025 there will be quite quite a few, we will reach out our pricing team um you know, constantly let us know um and as soon as it is the time, we will tell this client, we believe it's time to go to market now.
Um just based on future.
Um and Jeremy, look, you made the point earlier about strategy and budgeting.
Um, and having certainly over your costs.
Imagine from Michelle's perspective that cycle is determined by your customers, not the, not the solar developer, it's the customer that has control over that planning cycle for sure.
Um, there's only so many things you can control as an energy consumer, but understanding what your budget position, your strategy and then making a plan to work to it with enough time to deal with fluctuations like, you know, southern announcements of major generations withdrawing to the market.
That's the key being prepared and having an understanding of the things you can control that way.
And also you brought them out into a a road map for your energy costs and your renewable energy arrangements to so it all feeds back into the same position which is having a clear plan, having a budget associated with it and then, you know, working with your appropriate advisor in order to to deliver on that all sounds a bit you know, motherhood, but it's it's true.
It's the simple things that will make it happen.
Um, look at a question through from another question through from Gavin on the Q and a does energy action think it's possible to get renewable prices lower than conventional grid power Both now and up to 2030.
Um, I might have first crack at that if that's all right guys.
So look, the we we put up on screen earlier in the presentation um Some indicators of the level is cost of energy.
The challenge really will be around as jeremy highlighted firming costs to support renewable power.
Um It's it's possible there are renewable power generators.
Sorry, renewable power suppliers out there who have um very competitive pricing in the market and they're harnessing their portfolio of generation to offer really competitive pricing but they still have the challenge of firming that supply.
Um And it's the Um the volatility I suppose that we'll see in that stack that generation technology stack that will determine whether or not we will get delivered renewable energy prices cheaper than conventional energy prices between here and 2030.
We could add to it as well that what makes it renewable is the L.T.C
And the voluntary surrender of that ltC.
So irrespective of where your your contracting counter party is.
If you don't receive the LTC and you don't voluntarily surrender it.
You don't have renewable energy per se.
What you have is an agreement based on a national financial contract with the renewable generator.
But someone else is taking that L.G.C
And doing something with it.
So very simple.
It comes back to who owns the RTC and what you do with it.
That's what defines the renewable aspect of that arrangement.
Um And look a question through from Eckhart might throw to you, jeremy uh micro grids and other large off grid customers what solutions are out there? Well, we've seen a number of customers approach us.
Um, uh, in regard to microgrids, um, it's not my area of expertise quite honestly.
We have a team of people who look at that area.
So I would defer that to them quite honestly because I can't talk about that knowledgeably.
I can say though that customers who have large areas of land have looked at building their own behind the meter.
One occasion in front of me to solar power stations, usually quite small circle five megawatts.
And if you have land and it makes sense for you, then you can look at that.
It does expose, you know, to um, the same issues that ain't renewable developer will face, such as what return you get and how you connect and how you actually link it to your retail supply as well.
Because essentially, if you have a large solar installation that's in front of your meter, it's not directly supplying your site, you need, you need someone to come in and draw the contractual link between your generation and your cost of supply.
And whilst that seems on the face of it, quite obvious actually, it's quite complex to do.
Um more simply though, I mean, like for most energy consumers looking at the energy efficiency measures you can do on site, then looking at what can you do behind the meter, solar on your site.
Um, those are the most obvious ones to look at.
It's not, it's not going to suit everyone, but if you have a roof space you can use.
Those are the common sense things that people would look at.
And look, there's a, I guess the last couple of years we've seen a new breed of market participant emerged where they're willing to put up their capital for the generation, but also storage, um, and take on the complexity of optimizing the combinations of the solar production, the storage and, and playing the markets to get the most out of those assets and at the same time deliver some price.
Certainly back to their to the land holder, which is a pretty interesting space.
Another question Julia Christensen is making the point that some group possess are getting a better price than their non renewable energy contracts, which is a great result for local governments.
Indeed, we run a process, I think it was late last year for Byron Bay shire where we brought them a reduction against their conventional energy and renewable energy contract through our recent product.
I'd make the point that it's a lot of this comes down to Mark to timing.
And what's happening in the, the markets generally were coming off a low contract.
It's very difficult to obviously to get a discount below that if we are coming off a high contract and that opens up all sorts of opportunities.
Guys, we might draw a line under it.
We've gone 12, 13 minutes over.
We're approaching 12 o'clock, Everyone needs a cup of coffee and then it's probably time for a Guinness being ST Patrick's day off.
Thank you very much, jeremy and shall Australia for for making you available.
It's been a pleasure to chat with you again and to have your contribution this morning, Tony.
Thank you as well.
It's just been great to catch up on in this format.
Okay, Thank you very much.
Everybody will definitely make this available and we'll be in touch with you soon to circulate it, correct.