Dexus has inked one of Australia’s first supply-linked renewable Energy Supply Agreements (“ESA”), purchasing renewable energy off-site to power the base building services of more than 40 buildings in its New South Wales property portfolio.
This will be achieved through the procurement of renewable energy generation and presents a new lever for Dexus and the property industry to achieve net zero emissions.
Dexus, Australia’s largest office landlord, and Red Energy, which is 100% owned by Snowy Hydro, have signed a Memorandum of Understanding for a seven-year renewable ESA, to commence from January 2020.
The ESA is a key pillar in Dexus’s New Energy, New Opportunities strategy which aims to eliminate emissions from its portfolio and create value for Dexus’s customers and investors.
Executive general manager for sustainability at Dexus, David Yates, said the agreement is a first for an Australian real estate investment trust and supports the company's ambition to achieve net zero emissions by 2030.
“We have worked collaboratively with Red Energy to establish a new energy supply model which will deliver renewable energy sourced off-site. Importantly it provides long-term price certainty to insulate our customers from electricity market volatility, while driving down energy costs and supporting our collective carbon reduction goals,” Yates said.
“The ESA satisfies the demand from customers and investors for more reliable, environmentally responsible energy.
“Over seven years, we expect to source more than 300 gigawatt hours (GWh) of renewable energy via this ESA, which is equivalent to the energy consumed by 38,000 households for a year.”
Dexus head of group sustainability and energy, Paul Wall, said the agreement allows Dexus to hedge a portion of its power price, providing a buffer against energy market uncertainty.
He said the deal has been struck at below current market rates and leverages the large-scale generation certificates subsidies, resulting in a fixed price for 50% of energy load over the next seven years.
“This means we can pass the savings directly to our customers, while operating our buildings using a responsible, emission-free source of energy,” Wall said.
“This new deal is expected to reduce the retail energy rate which we pass onto our customers through outgoings by more than 10% compared to existing contracted rates.”