Rio Tinto has signed a 25-year contract to buy power from Upper Calliope, a solar farm European Energy plans to build near Gladstone in Queensland. At 1.1 GWac, it is bigger than almost every renewable power contract Leap has recorded in Australia. Four weeks later, Rio Tinto signed another one that was bigger still.
Key takeaways
- European Energy announced on 23 January 2024 a 25-year power purchase agreement with Rio Tinto for the Upper Calliope solar farm near Gladstone in Queensland, Australia, covering 1,100 MW of capacity.
- The Upper Calliope solar farm has a potential capacity of 1.1 GWac or 1.3 GWp, is expected to produce 2,800 GWh a year, will cover 2,400 hectares and is expected to start construction in 2025 or 2026.
- Once approved and developed, Upper Calliope could lower Rio Tinto's operating carbon emissions by 1.8 million tonnes a year and would provide enough electricity to meet about 5 percent of Queensland's current demand.
- On 21 February 2024 Rio Tinto signed a second 25-year PPA in Queensland, with Windlab for the 1,120 MW Bungaban wind project, under which Rio Tinto will buy 80 percent of the project's output to support its Gladstone operations.
- The tariff for the Rio Tinto and European Energy Upper Calliope PPA has not been disclosed, and Macquarie Capital acted as financial adviser to Rio Tinto.
What has Rio Tinto signed up to?
A long-term offtake contract for a solar farm that does not yet exist. A power purchase agreement, or PPA, is a contract to buy electricity from a specific project at an agreed price over a fixed term. Here the term is 25 years and the project is still awaiting approval, with construction pencilled in for 2025 or 2026.
The scale is what sets it apart. Upper Calliope's 1.1 GWac is the inverter rating, the most the plant can export at once. The 1.3 GWp figure is the combined rating of its panels, which is always higher because panels rarely all produce at full output together. Expected output of 2,800 GWh a year on 1,100 MW of export capacity implies the plant would run at an average of about 29 percent of its rating across the year.
The contract is offsite. Rio Tinto is not putting panels on its own land. European Energy builds and runs the plant, and Rio Tinto buys its output to cover consumption elsewhere.
Why does Rio Tinto need power on this scale?
Because its stated goal is to halve its global Scope 1 and 2 carbon emissions this decade, and its Queensland operations are large users of electricity. Scope 1 emissions come from a company's own operations. Scope 2 emissions come from the electricity it buys. Replacing grid power with contracted renewable supply cuts the second category directly.
The figures in the record show the weight of this one contract. Upper Calliope could lower Rio Tinto's operating carbon emissions by 1.8 million tonnes a year, and would supply about 5 percent of Queensland's current demand on its own.
The Bungaban contract a month later points to the same place. Windlab's 1,120 MW wind project is about 290 kilometres south-west of Gladstone, and Rio Tinto will take 80 percent of its output to support its Gladstone operations, with the remaining 20 percent going into the National Electricity Market. Bungaban is expected to start construction in late 2025 and produce electricity by 2029, and aims to cut carbon emissions by about 5 million tonnes a year. Together, the two contracts are the largest renewable offtake commitments Leap records in Australia.
Why would anyone sign for 25 years?
Because both sides want something only a long contract gives. For a developer, a 25-year PPA with a large industrial buyer is the foundation for financing a gigawatt-scale plant, since lenders can lend against more years of contracted revenue. For a buyer whose plants will run for decades, it fixes the cost and source of a large share of its electricity for most of the solar farm's working life.
Utilities make the same trade elsewhere. In Texas, CPS Energy chose a 25-year term for the Exodus 1 solar project, against a market norm of about 15 years. In Australia the long-dated buyers are mining and minerals companies rather than utilities.
The trade-off is risk. A buyer locked in for 25 years carries the chance that power becomes cheaper. A seller carries the chance it becomes dearer. The tariff that settles that balance has not been disclosed for either Rio Tinto contract.
Enerdatics' data shows how unusual the two Rio Tinto contracts are. Leap records 21 Australian PPAs of 300 MW or more. Bungaban, at 1,120 MW, and Upper Calliope, at 1,100 MW, are the only two above 1 GW. The next largest are 600 MW, about half their size. On duration, Enerdatics records 133 Australian PPAs announced from 2022 to 2025, of which 89 disclose a term. Eight run for 20 years or more, and four run for 25. All four of the 25-year contracts have industrial buyers: Rio Tinto twice, Fortescue Metals for 337.5 MW of the Bulli Creek solar project in October 2023, and Northern Star Resources for a renewable portfolio from Zenith Energy in December 2025.
What does the deal signal for Australian renewables?
It signals that miners and metals producers are the buyers who can underwrite gigawatt-scale projects in Australia. Most of the market's other large contracts are signed by utilities and retailers such as Stanwell, CleanCo, CS Energy and Snowy Hydro, and those that disclose a term run for 20 years or less. The longest and largest commitments come from companies decarbonising heavy industrial loads.
It also signals a repeat buyer. Rio Tinto's appetite did not stop in 2024. Leap records a 30-year PPA signed in May 2026 with ACEN and the Yindjibarndi Aboriginal Corporation for 102 MW from the Jinbi 1 solar project, which stretches the term further still.
For European Energy, a single contract on this scale anchors one of the largest projects in its pipeline. The company's broader position, and how investors priced it the same week, is covered in Enerdatics' analysis of Mitsubishi HC Capital's stake in European Energy.
What remains open is execution. Upper Calliope still needs approval, and both of Rio Tinto's Queensland contracts depend on projects that are years from producing power. The contracts fix demand. The build still has to follow.
Frequently asked questions
How large is the Upper Calliope solar farm?Upper Calliope has a potential capacity of 1.1 GWac or 1.3 GWp, is expected to generate 2,800 GWh a year and will cover 2,400 hectares near Gladstone in Queensland.
How long is the Rio Tinto PPA with European Energy?The PPA runs for 25 years. Its tariff has not been disclosed.
Is Upper Calliope Rio Tinto's largest Australian PPA?No. Rio Tinto's 25-year PPA with Windlab for the 1,120 MW Bungaban wind project, signed in February 2024, is slightly larger. They are the only two Australian PPAs above 1 GW recorded in Leap.
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