About Zero Emissions Water
Zero Emissions Water (ZEW) is a collective of 12 Victorian water corporations who are working together to reduce their emissions.
ZEW is an example of how collective effort among water corporations can support efficient achievement of emission reduction goals.
Why does ZEW exist?
The Victorian water sector shares a common goal – to reduce emissions efficiently and cost-effectively. The industry is motivated to take action to achieve these goals and contribute to the overall emission reduction efforts of the state. This ambition is supported by state policy that codifies a series of emissions reduction targets for each water corporation to meet in 2025, 2030 and 2035. Every water corporation in the state has committed to being net zero by 2035 and sourcing 100% of their electricity from renewable sources by 2025. These targets are set out in the the Statement of Obligations (Emissions Reduction).
How does ZEW help?
As part of their effort to reduce their emissions, the ZEW members created ZEW to collectively purchase renewable energy certificates. Each Large-scale Generation Certificate (LGC) represents one megawatt hour of renewable energy produced. Water corporations can therefore purchase and retire LGCs to demonstrate reductions in their electricity-related emissions. ZEW purchases LGCs on members’ behalf directly from the Kiamal Solar Farm, which is located in north-west Victoria. The creation of ZEW gave its members a scale of demand sufficient to attract competitive offers from a range of renewable energy generators. The existence of ZEW allows the members to manage the power purchase agreement, achieving economies of scale in capability and administration.
OUR STORY
2016 - Inception
In 2016 the Victorian Government set a clear emissions reduction objective for the Victorian water industry in Water for Victoria. The Zero Emissions Water (ZEW) story started with the question: “How can the water sector work together to reduce emissions?”.
How ?
ZEW came to life through the Intelligent Water Networks (IWN) Energy and Carbon program. Participants set out to determine how the Victorian water industry could collaborate to minimise scope 2 emissions through direct access to renewable energy generation. The IWN established a project group of water corporation staff to lead the investigation.
2017 - Investigation
The project began identifying options and assessing their feasibility. A consultant was engaged to investigate five strategic investment cases:
1. Business as usual (BAU)
No new investment in or purchase of renewables.
2. Purchase voluntary LGC / GreenPower
No specific investment in renewable generation or offtake agreement.
3. Power Purchase Agreement (PPA) with new renewable project
Collective offtake agreement to support a new generation facility.
4. Direct investment in grid scale renewables
Collective direct investment in a new generation facility with offtake agreement.
5. Direct investment in renewables (behind the meter)
Collective investments in projects at water corporation sites with offtake agreements.
Option assessment
After careful consideration, a PPA was agreed as the preferred option. The members agreed that there was value in pooling their demand for Large-scale Generation Certificates (LGCs), and that by going to market together they would have enough scale to achieve better results than going alone.
Delivery model
Having identified the preferred option, the project group worked to develop an appropriate delivery model. Governance research and legal advice pointed to an incorporated joint venture limited by guarantee as the most suitable vehicle for multiple water corporations to participate in a PPA together.
2018 - Activation
An expression of interest process led to the identification of suitable projects that were invited to tender. As a result of this process, ZEW selected Kiamal Solar Farm (KSF) – a soon-to-be-developed renewable power station near Ouyen in north-west Victoria.
Incorporation
Now ready to commence the project, ZEW was formally incorporated in October 2018. The 13 participating water corporations signed a Members’ Agreement which included ZEW’s Constitution. An Underwriting Agreement and Ministerial Approval was also obtained. Zero Emissions Water (ZEW) Ltd was registered with ASIC and the company entered into a PPA with KSF on the day of its incorporation. At this stage, the ZEW Board and Project Lead were appointed.
Board
Seven directors were elected from representatives the thirteen initial ZEW Members. The ZEW board members volunteer their time and are ultimately responsible for decisions made in accordance with the Members Agreement and Constitution.
Launch
ZEW was officially launched on 23 April 2019 by the ZEW Board and Water Minister at ScienceWorks.
2019 - Evolution
ZEW has developed a range of systems and processes to support its administration of the PPA. This includes a range of service providers such as accounting, legal, IT, technical, settlement and executive support providers. All functions that support the business and board have been outsourced to expert providers, which is an efficient allocation of resources and best suits the lean operating model.
Operating structure
ZEW is wholly owned by the twelve Members and operates as an independent legal entity with ultimate control over all business functions. The centralised delivery model enables a single PPA to operate between the Kiamal Solar Farm and Zero Emissions Water, which then distributes benefits to the members. This arrangement is more efficient than having twelve separate contracts being administered by each of the members.
2021 - Operation
KSF’s construction was completed between late 2018 and early 2021. Covering more than 500 hectares, the solar farm contains over 718,000 PV panels with single-axis trackers and a large syncronous condenser.
Connection
After some connection and construction challenges, KSF became fully operational in early 2021. With 239MW of panels it is the largest solar farm in Victoria, with a grid connected capacity of 200MW. The plant is roughly three times the size of Melbourne’s CBD.
Benefits realisation
Under the PPA, ZEW has realised considerable benefits for members, including access to Large-scale Generation Certificates. ZEW has also demonstrated the value that can be created by water corporations working together to pool their scale and capability to achieve a common goal.