Firm: Herbert Smith Freehills (Ararat Wind Farm)
Deal: Ararat Wind Farm has been advised on its entry into two innovative corporate power purchase agreements with Flow Power.
Area: Energy and resources
Key players: The Herbert Smith Freehills team was led by partner David Ryan, with assistance from Alexandra Carr and Luisa Giannone.
Deal significance: Ararat Wind Farm is a 240MW wind farm located in Victoria and jointly owned by Partners Group and OP Trust.
According to a statement from HSF, the offtake agreements supplement the existing 80.5MW feed-in tariff offtake agreement entered into by AWF and the ACT Government in 2015.
OP Trust announced on 16 February that it will be acquiring 51 per cent of the shares in Flow Power, which is a Melbourne-based electricity retailer.
“We have seen a lot of different models for corporate PPAs in the Australian electricity market,” said HSF partner David Ryan.
“The key issues are always about managing the difference in generation and load volumes at any point in time, managing locational pricing risks, and dealing with credit and default scenarios.
“The Flow Power offtake agreements provided a balance that satisfied the credit and revenue certainty requirements of AWF’s project financiers, yet provided Flow Power with the flexibility to offer cheap renewable energy products to its large commercial and business customers and help build its business.”
Commenting further on the transaction, HSF partner Peter Davis said: “The recent uptake of corporate PPAs has been remarkable”.
“Electricity users are taking advantage of very competitive pricing and the opportunity to make significant contributions to their sustainability goals,” he added,
“A variety of models are being utilised including ‘sleeved’ or retailer-facilitated arrangements as well as contracts for differences entered into directly between projects and customers.
“Customers are also moving the market with alternative approaches to pricing, commercial operations targets, security and quantity commitments.”