Australia’s largest office landlord, Dexus, has entered into an agreement to purchase renewable energy to power more than 40 buildings in its New South Wales property portfolio.  

Under the renewable Energy Supply Agreement (ESA), one of Australia’s first, Dexus and Red Energy have signed a Memorandum of Understanding for a seven-year renewable ESA, to commence from January 2020.

The ESA will cover 50% of the energy load with the option to extend that to 100%, enabling Dexus to accelerate its pathway to zero emissions. The deal will also support new renewable energy projects in Australia.

“This is a first for an Australian real estate investment trust and supports our ambition to achieve net zero emissions by 2030,” said David Yates, Executive General Manager for Sustainability at Dexus.

“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,” Mr Yates said.

He added: “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.”

Paul Wall, Head of Group Sustainability and Energy at Dexus, said the deal is expected to reduce the retail energy rate passed onto customers. “This agreement allows us to hedge a portion of our power price, providing a buffer against energy market uncertainty. 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 our 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.

Mr Wall added, “This ESA will help Dexus achieve net zero by 2030 – 20 years ahead of the targets established under the Paris Agreement, built into our electricity procurement in preference to purchasing carbon offsets.”

Red Energy is 100% owned by Snowy Hydro. Paul Broad, Chief Executive Officer of Snowy Hydro, said: “Red Energy’s ‘firmed’ renewable energy is backed by Snowy Hydro’s integrated renewables portfolio, which includes the recent addition of 888MW from offtake agreements with eight new wind and solar projects.

“This landmark ESA with Dexus represents one of the first direct off-takes for ‘firmed’ renewable electricity of this type.  On-demand hydro from the mighty Snowy Scheme will underpin our contracted wind and solar generation, meaning Red Energy can supply Dexus with reliable renewable energy.” Mr Broad said.

Dexus also plans to install onsite renewables on some assets, particularly larger-scale office properties and retail shopping centres, as part of an ongoing building refurbishment program.

Mr Yates concluded: “We see that the next decade will present many commercial opportunities to achieve net zero emissions and this ESA presents a new pathway to get there – one which we think is replicable and can move Australia’s entire property market.”

More from COMMO: