Foresight Group-backed developer NZ Clean Energy (NZCE) and Fonterra have signed a long-term virtual power purchase agreement (PPA) under which the dairy cooperative will purchase electricity generated by NZCE’s Darfield solar-plus-storage project in Canterbury.
The Darfield project has a generation capacity of 129MW and is designed to generate approximately 218GWh of renewable energy per year.
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It is located near Fonterra’s Darfield manufacturing site, with grid connectivity and proximity to industrial demand cited by NZCE as factors in the site’s selection. The ‘agrivoltaics’ project has been designed to allow continued sheep grazing across the site during operations.
Construction is expected to create more than 100 jobs in the Canterbury region.
Under a virtual PPA structure, Fonterra does not take physical delivery of the electricity at a specific point; instead, the agreement serves as a financial hedge, providing the cooperative with long-term price certainty against volatility in the wholesale electricity market while supporting the development of new renewable energy generation.
Fonterra chief operating officer Anna Palairet said the timing of solar generation aligned with the dairy industry’s seasonal needs.
“Solar is a good fit for our operations, with generation aligning well to the peak of the milk season. This agreement helps bring a new generation to market while at the same time giving us long-term price certainty,” Palairet said.
NZCE CEO Harry Simpson said the deal demonstrates the commercial viability of long-term PPA structures for financing new renewable energy generation in New Zealand.
“Long-term agreements of this kind are exactly what’s needed to unlock investment in new renewable energy generation – they give developers the certainty to build and give industrial customers a credible, cost-effective path to sourcing renewable energy,” Simpson said.
A replicable development model
For NZCE, the Darfield agreement is intended as a template for its broader New Zealand pipeline rather than a standalone transaction.
NZCE chief operating officer George Hughes said Darfield’s grid connectivity, industrial demand proximity, and battery storage capability position it as the blueprint for the company’s portfolio expansion.
“We intend to replicate this approach across our portfolio, and Darfield is the blueprint,” Hughes said.
NZCE, founded in 2022 and backed by global infrastructure investment manager Foresight Group, has a development pipeline that includes projects in Masterton, Wairarapa, Dannevirke and Manawatū-Whanganui, with initial construction expected to commence in 2026 and 2027.
The Darfield project’s design includes provision for future battery storage capability, though the announcement does not specify the planned size or timeline for that component. However, it is worth noting that the BESS was sized at 200-400MWh according to a LinkedIn post from the developer last year.
The Darfield PPA arrives at a moment of accelerating solar development across New Zealand. Contact Energy, this week, completed module installation at the 150MW Kōwhai Park solar PV plant at Christchurch Airport, with commercial operations expected in the second half of 2026.
Lodestone Energy has broken ground on a 31.5MWdc solar farm at Ruataniwha Plains in Central Hawke’s Bay, which is set to be the region’s first utility-scale solar development.
Meridian Energy, meanwhile, received consent in May 2026 for a 120MW solar plant at Bunnythorpe in Palmerston North, which also planned to include battery storage.
Fonterra’s coal exit and procurement shift
For Fonterra, the Darfield PPA is one element of a broader decarbonisation programme.
The cooperative targets a 50.4% reduction in absolute emissions from manufacturing operations between FY18 and FY30, with an ambition to reach net zero by 2050.
Its North Island manufacturing sites are already coal-free, and it has a pipeline of projects to convert its remaining South Island sites to renewable energy sources.
Fonterra had previously signed a separate virtual PPA with ANZA Power for the 42MWdc Somerton solar PV power plant near Rakaia in Canterbury, also announced this week, under which it will take 80% of that project’s generation output.
As PV Tech reported last month, New Zealand’s residential solar approvals are also set for reform, with the government launching a sector review aimed at streamlining the consenting and connection process for residential solar installations, removing barriers that have slowed distributed generation uptake relative to other developed markets.
