Fonterra signs deal to take majority of power from new Canterbury solar farm
Private equity-backed ANZA Power has signed a “virtual” power purchase agreement with Fonterra for the dairy giant to take 80% of the generation output from its Somerton Solar Farm project, near Rakaia in Canterbury.
ANZA, an Australian and New Zealand energy developer and operator that is part of global infrastructure investor I Squared Capital, said the deal with Fonterra was a significant milestone.
Backed by a US$300 million ($516m) equity commitment from I Squared Capital, ANZA Power develops, owns and operates integrated energy solutions, including renewable generation and battery storage.
I Squared Capital, a global infrastructure investor, is ultimately owned by ANZ Renewables GMF II Investments Pte – a Singaporean investment company.
Under the power purchase agreement (PPA) the farm will deliver 42MWdc (megawatts direct current) of solar generation capacity.
ANZA said the grid connection and site infrastructure will be engineered to accommodate a future battery energy storage system without a major rework.
Once operational, the project is expected to generate about 65,000MWh of renewable electricity annually.
Fonterra chief operating officer Anna Palairet said the partnership supported the growth of new renewable energy in New Zealand, helping strengthen security of supply for the electricity sector.
“At the same time, it increases the co-operative’s access to renewable electricity and gives us long-term price certainty, helping ensure our operations are set up for the future,” she said.
“Somerton Solar Farm will connect to EA Network’s grid and is located between Fonterra’s Darfield and Clandeboye manufacturing sites,” she said.
ANZA said Somerton was the company’s most advanced New Zealand project to date.
A “virtual” PPA is a contract structure in which a power buyer agrees to purchase a project’s energy for a pre-agreed price, thereby acting as a financial hedge against volatile electricity prices.
In this agreement, the utility-scale solar project receives the market price at the time the energy is sold.
If the market price is greater than the fixed price, the buyer receives the difference.
If the market price is less than the fixed price, the buyer pays the project to make up the difference.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.
Take your Radio, Podcasts and Music with you
Get the iHeart App
Get more of the radio, music and podcasts you love with the FREE iHeart app. Scan the QR code to download now.
Download from the app stores
Stream unlimited music, thousands of radio stations and podcasts all in one app. iHeart is easy to use and all FREE
