Contractual arrangements to supply renewable energy

1 September 2022

We were asked to assist Contact Energy (Contact) and its 100% owned energy solutions business Simply Energy to enter into contractual arrangements to supply renewable electricity for a new datacentre near Clyde Dam for UK-based digital infrastructure company Lake Parime.

Contact owned the land located south of the Clyde Dam alongside the Clutha River on which the datacentre would be constructed by Lake Parime.  Contact/Simply Energy would also supply electricity for the datacentre on a long-term basis.

Simply Energy wanted to implement new demand flexibility technology to allow the datacentre to ramp its operations (and the electricity supply) up and down depending on New Zealand's electricity needs, weather and hydro generation flows.  Bespoke contractual arrangements were required to reflect this demand flexibility and the unique nature of the datacentre's construction.

In order to meet the electricity demands of the datacentre, a new substation was required at Clyde Dam which requires Otago electricity distributor Aurora Energy to build and operate the new substation.

The arrangements between Contact, Simply Energy and Lake Parime involved complex property arrangements (the lease, construction contract and development issues for the construction of the new datacentre and substation) along with a bespoke contractual approach to the long term (10+ years) electricity supply arrangements.

Buddle Findlay was able to utilise experts across the firm (including the corporate and property teams) to ensure that Contact and Simply Energy's objectives were met in a seamless and responsive manner that addressed the particular risks of the transaction.  The demand flexibility aspects of the electricity supply agreement is aligned with Contact's decarbonisation aspirations as it will reduce the volume of thermal generation needed to back up the national grid in a dry year.