en.Wedoany.com Reported - New Zealand Clean Energy (NZCE) has signed a long-term virtual power purchase agreement (virtual PPA) with dairy cooperative Fonterra, under which Fonterra will purchase electricity generated by NZCE's Dunsandel Solar+Storage project in Canterbury.
The Dunsandel project has a generation capacity of 129MW and is designed to produce approximately 218GWh of renewable energy annually. Located near Fonterra's Dunsandel production site, grid access and proximity to industrial demand were factors in site selection. The "agrivoltaic" project is designed to allow continued sheep grazing on the site during operations.
Construction is expected to create over 100 jobs in the Canterbury region. Under the virtual PPA structure, Fonterra will not physically receive electricity at a specific location; the agreement serves as a financial hedging tool, providing the cooperative with long-term price certainty against wholesale electricity market volatility while supporting the development of new renewable energy generation.
Fonterra Chief Operating Officer Anna Palairet said the timing of solar generation aligns with the seasonal demand of the dairy industry. NZCE Chief Executive Officer Harry Simpson said the deal demonstrates the commercial viability of long-term PPA structures for financing new renewable energy generation in New Zealand.
Founded in 2022, NZCE is backed by global infrastructure investment management firm Foresight Group. For NZCE, the Dunsandel agreement is intended to serve as a template for its broader pipeline of projects in New Zealand. NZCE Chief Operating Officer George Hughes said Dunsandel's grid access, proximity to industrial demand, and battery storage capability make it a blueprint for the company's portfolio expansion. NZCE's development pipeline includes projects in Masterton, Wairarapa, Dannevirke, and Manawatū-Whanganui, with initial construction expected to begin in 2026 and 2027.
The Dunsandel project design includes space reserved for future battery storage capacity, although the announcement did not specify the planned size or timeline for that component. According to a LinkedIn post by the developer last year, the battery energy storage system (BESS) is sized at 200-400MWh.
The Dunsandel PPA is signed as solar development accelerates across New Zealand. Contact Energy has completed module installation at the 150MW Kōwhai Park solar PV plant at Christchurch Airport, with commercial operations expected to begin in the second half of 2026. Lodestone Energy has broken ground on a 31.5MWdc solar farm on the Ruataniwha Plains in central Hawke's Bay. Meridian Energy received approval in May 2026 for a 120MW solar plant at Bunnythorpe, Palmerston North.
For Fonterra, the Dunsandel PPA is part of its broader decarbonization plan. The cooperative aims to reduce absolute emissions from manufacturing operations by 50.4% by fiscal 2030 compared to fiscal 2018, and is targeting net-zero emissions by 2050. Its North Island manufacturing sites have been coal-free, and a series of projects are planned to convert its remaining South Island sites to renewable energy. Fonterra has previously signed a separate virtual PPA with ANZA Power for the 42MWdc Somerton solar PV plant near Rakaia, Canterbury, under which it will offtake 80% of the project's generation.
In other news, PV Tech reports that New Zealand residential solar approvals are also set for reform, with the government launching an industry review aimed at streamlining approval and grid connection processes for residential solar installations, removing barriers to distributed generation development.
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