Solar Is The ‘Low Hanging Fruit’ on Corporates’ Way to Net-Zero Emissions

With Negative CO2 Abatement Costs, Solar Is The ‘Low Hanging Fruit’ on Corporates’ Way to Net-Zero Emissions

The spot price for Australian Carbon Credit Units (ACCUs) reached a record high on Thursday last week. Prices have climbed to $33.50/t after starting the year at $16.50/t, or less than half the value they are todayThe price of ACCUs has risen ‘faster than house prices and in essence is the result of tight supply coupled with increasing demand. This is not good news for businesses using or hoping to use carbon offsets, such as ACCUs, to achieve abatement goals. It’s not all bad news though as there are alternative strategies that are not just lower cost but are oftentimes cost negative.

The Clean Energy Regulator uses ACCUs as the unit issued to represent one tonne of carbon dioxide equivalent (tCO2-e) stored or avoided by an Australian project. They are required to be sourced and surrendered by large emitters under the safeguard mechanism which is designed to minimise additional emissions. ACCUs are earned by registered parties who create them from demonstrated emissions avoidance or storage of carbon dioxide in vegetation and soil.

The rapid increase in ACCU price over 2021 has been driven by increased voluntary buying, and the now realised prospect of a net-zero emissions target. In particular, increasing contracting demand from the corporate sector has led to a tight supply in the spot market, with new credits being set aside to fulfill large bilateral contracts and in turn limiting the supply to smaller spot buyers.

While ACCUs are no longer a cost-effective abatement strategy, Solar is.

With the surge in price of ACCUs, it has become increasingly less cost-effective to use them to achieve carbon abatement, and now is the time to consider lower cost alternatives, that provide a less volatile, more sustainable, and significantly more cost-effective solution.

For those in a position to install onsite solar, not only can they achieve abatement at a lower cost than trading ACCUs, but often at a negative cost; where rather than a financial cost per t-CO2, the end user will see a saving per t-CO2 in the form of reduced electricity bills, income from Feed-in-tariffs, and demand charge savings.

Not only does onsite solar deliver direct benefits, but should the end-user prefer to monetise their abatement, they can sell their certificates, earned from the onsite solar, for a significant financial benefit on top of any direct electricity cost savings.

The indicative client example below shows clearly the difference in cost for emissions reduction from trading certificates vs direct abatements from onsite solar:

With the Net-Zero Target now real, ACCUs will only become more costly.

The recent announcement of a national net-zero emissions target will only stoke the already sky-high ACCU prices and now is a perfect time to consider an alternative. Verdia offers a range of renewable energy services, which can help you achieve negative carbon cost abatement, deliver direct energy savings, increase operational resilience, and help you reach net-zero.

Contact us if you would like to know more about our renewable energy services and how they can help you achieve your critical business goals.

Call us to find out more 1300 113 243