Friday 16th June 2023
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Channel Infrastructure (CHI) announces that, following a formal market tendering process, it has now entered into a long-term fixed price variable volume contract for the supply of renewable electricity from 1 January 2024.
The electricity supply arrangements under this new contract include Energy Attribute Certificates, certifying that electricity has been generated from renewable sources, and is for a period of 6 years with the right to extend for a further 2.25 years to 31 March 2032 at the option of Channel.
The electricity price is fixed over the contract term and implies an annual electricity supply cost of c.$6 million per annum (based on estimated electricity consumption) over the initial 6-year contract term, and, if the option to extend is exercised, c.$5.5 million per annum over the subsequent 2.25-year period. This represents a saving of over $2 million per annum over the initial contract term against the 2023 contracted supply price.
Commenting, CEO Rob Buchanan said: “Electricity is a key operating cost for our business. The physical supply contract mitigates our volume risk and provides long-term cost certainty, which allows Channel to focus on its core business. A significant portion of our revenue is subject to indexation, therefore fixing one of our largest operating costs is expected to deliver an improved earnings profile from 2024 onwards.”
“Importantly, Energy Attribute Certificates will underpin our commitment to renewable sources of electricity. Meeting all our electricity needs from renewable sources would mean that Channel will have largely eliminated its direct emissions from 2024 - some six years ahead of the company’s target. Our fully consented solar farm project, Maranga Ra, remains a significant development opportunity, and – while its peak capacity is now significantly larger that the terminal’s energy requirements – we will continue to evaluate opportunities for this project, alongside other Marsden Point site repurposing opportunities.”
“Delivering a low-cost, secure and renewable electricity supply was one of our key priorities for 2023 and I am pleased Channel has been well supported by the market. Having reset our transmission and now our supply costs, we will focus on options to reduce our connection costs.”
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