Check our FAQ section to find more in-depth information about WePower and our business model, energy contracting using Virtual PPAs and how blockchain enables our technological solutions.
WePower is a renewable energy contracting and trading platform. By using technology our platform connects businesses with renewable energy producers and helps them to transact directly via virtual power purchase agreements (PPAs), also known as corporate PPAs. WePower is operated by WP Australia Pty Ltd, a privately owned company
WePower was created to solve some of the most pressing obstacles in today’s electricity market:
- Direct access and entry barriers:
due to the bespoke nature of the process and very large transaction costs, only the largest enterprises can participate in the corporate PPA market. We eliminate these barriers by providing a standardised solution and streamlining the process, making this market accessible to all businesses, regardless of their size or industry.
- Aggregation and risk diversification:
transacting directly between one producer and one business is very risky for both renewable energy producers and businesses. Aggregation on both sides helps to share production, resourcing and payment risks across a pool of participants. So buyers can be sure that if there are any technical or resource issues (e.g. the wind is not blowing as expected) with one producer, they can rely on others to produce the electricity while every producer can be sure that if a buyer defaults, they can rely on other buyers until a replacement buyer is found.
- Price certainty:
as electricity systems transition from old, large coal producers to newer, more advanced technologies, electricity prices will inevitably be volatile. However, businesses are looking for a stable and predictable electricity cost and producers want to have a long-term predictable revenue stream so they can obtain financing. Corporate PPAs are becoming increasingly more popular as a way for businesses to transact directly with electricity buyers at a fixed cost without being physically collocated or managed through standard energy retail arrangements.
one of the biggest challenges in the standard corporate PPA market is that once these long term agreements are in place, nothing that can be done about them. This is not aligned with the nature of the business environment, which is dynamic and constantly evolving. We use blockchain technology to provide fungibility with these long term contracts, providing comfort that if the business requirements change for any reason, the contract can be sold to other participants on the platform.
Our platform eliminates the complexity involved in entering into a PPA, giving businesses the ability to choose whatever renewable energy volume they want to contract, increasing a renewable energy project’s exposure and providing a liquidity to trade PPAs that has not existed before now.
Using our digital solution, you can create your own renewable energy portfolio without facing huge legal and financial structuring costs, difficult negotiations with the counterparties or a long and human resource intensive process.
A virtual PPA is a financial instrument that sits outside your retail contract and acts as a pricing hedge solution. Under this agreement, renewable energy producers and businesses agree that the renewable energy producer will pay the buyer the difference between the agreed electricity price and the wholesale market price for each settlement period. If the difference is negative, the buyer will pay the renewable energy producer.
The agreement is “virtual” because the producer supplies electricity to the general market (the National Electricity Market [NEM]) and the agreement acts like a proxy, attributing producers’ production and pricing it to a specific transaction with the business. The reality is that nobody can trace individual electrons, which is why the attribution happens on a financial transaction basis.
Let’s use an example to better understand how a virtual PPA works:
- Under agreement, a business energy buyer and the producer agree that 1 MWh (1000 kWh) of electricity produced by the generation facility will cost 50 AUD.
- When the producer generates 1 MWh of electricity, the NEM pays the energy spot price to the producer for the supplied energy, which is equal to 80 AUD per 1 MWh (1000 kWh).
- We calculate the electricity price difference and issue an invoice to the producer to pay 30 AUD to the business energy buyer.
- If the energy spot price is lower than 50 AUD, for example 40 AUD, then we issue an invoice to the business energy buyer to pay the difference, 10 AUD in this example, to the producer.
This exercise is performed for every 30 min electricity settlement interval and the net amount is paid out once a month to the business energy buyer or the producer.
Electricity prices are very volatile. Just like any business, this volatility makes it hard to plan investments. This is why renewable energy project developers are keen to contract for their electricity production upfront. It helps them get a level of certainty that their financiers will be comfortable with. To conclude PPAs and receive the necessary funding for a project, producers are often ready to offer significant discounts on electricity prices to business energy buyers, since their financial calculations are based on the cost it takes to build the facility rather than the fuel and market balancing dynamics that drive electricity wholesale market prices.
Business energy buyers are often exposed to the energy spot price or fixed price retail contracts, which in many cases reflect current electricity market dynamics instead of the long term outlook. To manage their electricity expenses and control early budgets, businesses often look for various hedging instruments. By signing up to PPAs, businesses gain comfort that their electricity expenses will not exceed established limits or may even be lower than expected. This provides a level of certainty and helps them plan other, often more crucial, investments within the business.
The process is simple. Let us guide you through the 5 step journey
- Business energy buyers create an account on the WePower platform and complete the know-your-customer process.
- The registered buyer uploads their historic consumption profile on the platform. Using historic data, we provide insights into the buyer’s consumption patterns and show how different PPAs available on the platform would affect it.
- Using the details provided about the business energy buyer and their historic consumption profile, we check the buyer’s credit profile through third party services and establish limits for entering into PPAs. These limits are put in place to control the risk of financial default. Once this is complete, the buyer is ready to go.
- To ensure transparency and fairness with energy prices under the PPA, we use auction principles. To conclude a PPA with a particular renewable energy producer, the buyer must participate in the relevant renewable energy auction. By participating in the auction, the buyer must bid for a selected energy volume to be produced. The buyer always sees how much electricity the generation facility is estimated to produce and supply to the grid over a year and how this correlates with the buyer’s consumption profile. During the auction, the buyer can check any necessary information about the project, such as a brief description, due diligence information prepared by WePower, the PPA and a summary of key terms.
- If the buyer’s bid wins in the auction, the PPA is automatically created between the parties.
Buyers can also use the platform’s secondary market, where they can contract to buy the whole, or part, of an existing PPA from another user on the platform.
There are many reasons, but we believe that these are the most important:
- The business energy buyer has the right to choose the amount of the intended producers’ production capacity they want to contract for. The company can contract a small portion of capacity across different auctions. This portfolio approach allows the buyer to choose renewable energy that best fits the company’s consumption profile and mitigate the technical and production risks associated with a single producer..
- Buyers do not need to negotiate PPAs. All virtual PPAs are standardised and prepared using the same single standard. Rights and obligations are perfectly balanced between buyers and producers to ensure a cost effective, quick and smooth process for entering into agreements, which has been approved by institutional capital providers. This significantly reduces PPA transaction costs, which have always been a big concern for the businesses.
- Buyers are not affected by the high costs of consulting, financial and legal services when entering into a virtual PPA. We have done the hard work for everyone and aligned it with energy market participants.
- We perform extensive due diligence of the renewable energy projects on WePower platform. Hence, businesses can simply review the results and save both time and consultant fees.
- We supervise each renewable energy project throughout the term of the PPA, handling settlements and representing all the business energy buyers for the producer.
Outside of Wepower platform, the conclusion of these types of contracts takes several months or even years and business energy buyers can pay up to 8% in transaction fees for various advisors.
Green energy auctions have two stages: priority stage and general stage.
In the auction priority stage, business energy buyers contract electricity for the established minimum auction price per MWh. At this stage buyers do not compete for the electricity volume by placing higher bids. However, in the auction priority stage only buyers who have WPR tokens can participate. The amount of energy volume that the buyer can contract during the auction priority stage will depend on the proportion of WPR tokens it has when compared to the other buyers who are participating.
If not all the auctioned electricity volume is sold during the auction priority stage, the general stage starts. During the general stage any buyer can participate and compete for the electricity volume. The biggest price bids win in the auction and secure their electricity volume. Auction priority stage participants can also make bids during the general phase.
After the auction ends, the WePower platform creates virtual PPAs based on the bids that won the auction.
We do not charge energy buyers any fees for using our planning tools or participating in the auctions. Additional fees may apply for using add-on products and services in the platform. However, even then the platform users will be carefully notified in the case of an additional fee.
Today the WePower platform is only available to business energy buyers established in Australia. Business energy buyers must be eligible to participate in the renewable energy auction.
To become an eligible business energy buyer, you should complete the next steps:
- Register on the WePower platform.
- Complete the know-your-customer process.
- Upload the company’s historic consumption data.
- Complete the creditworthiness check.
Visit your distributor’s website and download your consumption data in NEM12 format directly. This can be uploaded to our Going Green Assessment tool to check your green energy potential.
If you have your data in a different format, don’t worry. It is possible to upload the file in another format and leave your email address so that we can contact you once the file is being handled by our back-office team.
A list of energy distributors in Victoria can be found here. They usually have customer portals, enabling users to download their consumption data.
Please contact us using firstname.lastname@example.org.
No, we do not change any current retail contracts that a business energy buyer has. Any existing retail contracts would not affect participation in the WePower platform and signing up to virtual PPAs.
There is no relation between us and the retailer. The retailer continues to provide physical energy to the business energy buyer. Our platform provides an opportunity for the business energy buyer to enter into a virtual PPA, which is a financial instrument for electricity price management and contracting renewable electricity directly from the source.
The electricity wholesale market is set up so that the most expensive producer that can supply missing electricity demand for each half hour period sets the overall wholesale market price. The system is designed this way so that there is sufficient financial incentive to reliably meet electricity demand at a whole system level. Alongside the risk and any other additional prices set by your retailer, this system defines your electricity bills.
Renewable producers are the present, and inevitably also the future, of the electricity market. They run on an abundant free resource, they can be flexibly managed, and with the rate of technological innovation in the field they are already the most cost effective way of building and generating electricity.
Relying solely on market exposure-based electricity pricing, which is at the core of standard retail arrangements, is certainly a risky strategy and results in ongoing electricity price fluctuations. Our electricity system is in transition and the old, inflexible producers will continue affecting prices until the transition is complete. Renewables are the future, so direct transactions with renewable producers can provide more long term certainty for electricity buyers.
Liquidity in the virtual PPA market means an ability for the business energy buyer to assign its rights and obligations under the agreement to any other person. The initial buyer can assign all or part of its rights and obligations. It can even break its contracted electricity volume to 0.1% volume contracts and sell for a fee or free of charge using our secondary market.
Liquidity in the virtual PPA market has not existed before, but our platform is changing this. Our secondary market creates an opportunity for the business energy buyer to:
- Exit the virtual PPA, if needed.
- Sell contracted electricity volume that is no longer necessary for the business energy buyer due to changes in the business.
- Sell part of the contracted electricity volume to its supply chain, which does not have the ability to participate in renewable energy auctions to contract virtual PPAs for a longer period.
- Contract to buy renewable electricity volumes to match the business needs without participating in the renewable energy auction, or contract to buy additional volumes to fully cover the business’s consumption profile.
The electricity spot price is the current market price at which electricity is bought or sold for immediate payment and delivery. It’s the amount that producers receive for their production and retailers pay for electricity.
Information (price and demand) about spot prices can be found on AEMO's website. There are 5 different spot prices, one for each of the 5 regions where the NEM operates.
NEM operates as a 5 region spot market. The regions are the following:
- New South Wales and the Australian Capital Territory
- South Australia
Wholesale statistics about spot prices can be found on the Australian Energy Regulator website.
Due to our standardised approach on conclusion of virtual PPAs and the ability for business energy buyers to create their renewable energy portfolio, the biggest risk associated with the PPAs is a significant decrease in electricity price compared to the price originally agreed under the PPA. However, in this situation the cost of physical electricity significantly lowers for business energy buyers as well because of the drop in price, thus lowering the overall risk.
We digitalise the energy market. To create our platform we had to digitalise most of the process that is currently done by people and excel spreadsheets in the energy market; neither efficient nor sustainable.
To digitalise the energy market, we use blockchain and smart energy tokens. One Smart Energy Token is equal to 0.1% of electricity volume to be produced during a trading interval under the National Electricity Rules by the producer under a concluded virtual PPA. It represents a fraction of 30 minutes of renewable energy, with stapled rights regarding swapping the fixed price for the floating price under the virtual PPA. Tokens are written on blockchain and stored on our platform. Each token is linked with the actual generation facility’s electricity production data.
We see blockchain as a crucial means to provide liquidity to virtual PPAs, making them tradable while still maintaining the immutability of ownership.
This technology ensures that:
- We monitor the generation facility’s electricity production data for each 30 minute interval in a transparent way so the owner of the matching smart energy token for that 30 minute interval can claim the benefits under a virtual PPA.
- Transparent tracking of tokens on blockchain allows us to implement secondary market functionality and bring liquidity to the market by dividing contracts into 0.1% fractions. Blockchain stores all the information about who the buyers are under each virtual PPA and allows us to aggregate hundreds of buyers under one agreement.
- Tokens serve as proof that business energy buyers are contracting renewable energy and supporting a sustainable future.
A WRP token is a utility token that provides priority access to renewable energy auctions on our platform. Renewable energy auctions are at the core of our proposition. WPR token holders have an exclusive priority access to purchase energy at the minimum auction price.
Energy allocation in the priority auction is equal to the share of total tokens a user has, compared to other auction participants. In the priority stage of the auction you can contract renewable energy without competing on price. It also constantly grants you access to the energy donation pool filled with 0.9% of the energy contracted via the auctions on our platform.
See the list of token exchanges you can buy here.
We do not store user WPRs on the platform. Instead, we monitor the balance of the user registered WPR wallet during the duration of any auctions where the user has pledged their WPRs. (A user is associated with one wallet address.) The auction participant has the flexibility to pledge all or some of their tokens to an auction, or withdraw a pledge from an auction.
WPRs and Smart Energy tokens are not the same thing. Energy tokens will be stored in secure wallets inside our platform. These are not be transferable outside of the platform during the pilot.