The past year has been a curious one for the wind and solar contracting market. The past year has been the biggest in terms of capacity for several years, but marked by bigger and fewer deals, and some landmark innovations.
But the lack of activity, which has stalled the federal government’s efforts to reach its target of 82 per cent renewables by 2032, could be about to come to a dramatic end as a “contracting cliff” – driven by the expiry of the renewable energy target and the arrival of big new loads – looms into view.
The Business Renewables Centre Australia released details of its latest annual corporate PPA report at the All Energy conference in Melbourne on Thursday, revealing that 2026 was by the biggest year yet in terms of corporate deals with a total of 6 GW.
Granted, this includes the 3 GW needed by the country’s biggest energy user, the Tomago smelter, which is to be channelled through the government owned Snowy Hydro, but it yet to find wind and solar suppliers.
Still, even without that still incomplete deal, the year has been the biggest and the most innovative to date, including a first-of-its kind deal between data centre company Firmus and energy trading firm Gunvor, and Rio Tinto’s PPA with the Jinbi solar farm owned by First Nations group Yindjibarndi Corp.
It is also the first year that the majority of deals have involved battery storage. “We can say that the era of firmed renewables and PPAs has begun,” says Chris Briggs, the CEO of the BRCA.
Briggs says the lack of deal numbers reflects the prevailing gap between the asking price of wind and solar project developers, and the price that buyers are prepared to pay at a time when wholesale prices are low, and the futures market are still yet to point to a big rise.
But he says that may be about to change.
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“We’re seeing high market uncertainty, particularly related to uncertainty around the timing of coal plant closures and therefore forward prices.
“We’re seeing a continuing price gap between buyers and sellers, higher project prices, while buyers are looking at the current prices and the forward prices, and there’s a gap that they’re being asked to kind of step over.
“But we’re on the cusp of some quite interesting policy changes,” he said, pointing to new rules that require data centres to bring their own renewables, and the new market design to succeed the Capacity Investment Scheme,.
“So buyers are faced with quite a difficult choice. Do they contract now in this uncertain environment, or do they wait and risk being caught up in the stampede, there’s a lot of other buyers are going to be coming into the market ahead of 2030 as well.
“The other the other contextual factor is we have ultra low LGC prices, and that’s probably going to continue in the short term. But as we get around 2030, then we’re likely to see some some volatility and activity there.”
“The perception of risk is relatively limited still. I mean, we see a pickup in the in the futures market, but not a lot yet on FY 29 and FY 30 based on futures contract prices.”
However, Gilles Walgenwitz, the head of energy markets at ERM, says the “contracting cliff” highlighted by Briggs and the VRCA may be steeper than many expect. In fact, he points to 62 terawatt hours of annual volume that will be contracted by 2030 or 2032.
That includes 29 TWh from retails, nine TWh for Tomago, about 12 TWh from data centres, a further 17 TWh from new contacts from other corporations committed to cutting emissions, and another 6 TWh from renewals.
“The second point beyond this is that we believe that the supply may be thinner that the pipeline is telling,” he said.
“We have about 50 gigawatts of renewable energy capacity in the pipeline, and in (AEMO’s) Electricity Statement of Opportunities, it’s very clear that only 21 per cent of that is fully committed at this stage. So there is a slight potential tightening in the market.
“The last big component I would flag … is that we have the data centres coming.
“They could change the dynamic, in our view. First of all, because they are very eager to contract quickly, because there is a sort of a race between the hyper-scalers, the neo-clouds businesses, and the data centre co-location providers to get there quickly and and comply with regulatory requirements.
And secondly, they will be ready to pay higher than usual. That’s because the price, I would say, of the compute that they sell megawatt of power input is much higher than the cost of electricity.
“So all of this for me means that if anyone here has a 2030 target, probably don’t wait 2029 to start strategising. It will be too late, or you will be paying a high price.”
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Giles Parkinson
Giles Parkinson is founder and editor-in-chief of Renew Economy, and founder and editor of its EV-focused sister site The Driven. He is the co-host of the weekly Energy Insiders Podcast. Giles has been a journalist for more than 40 years and is a former deputy editor of the Australian Financial Review. You can find him on LinkedIn and on Twitter.
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