Fortescue has signed its first deal to sell power from its Pilbara Green Grid to another company. Lithium miner PLS Group will take a committed minimum of 325GWh of electricity a year for 20 years at its Pilgangoora operation in Western Australia, with supply targeted to begin in calendar 2029.
That volume is about the annual electricity use of 45,000 Australian homes, according to Fortescue. The agreement turns a renewable network that the iron ore miner began building for its own mines, railways and ports into a business that sells power to neighbours. For PLS, which disclosed the deal in an ASX announcement on 28 October, the aim is cheaper and cleaner power for the expansion of its mine.
A 25km line to Turner River
The power purchase agreement is between PLS subsidiary Pilgangoora Operations Pty Ltd and FMG Clean Energy Pty Ltd, a wholly owned Fortescue subsidiary. Pilgangoora will connect to Fortescue’s Turner River solar farm and 220kV substation through a new transmission line of about 25km. Most of it will follow the mine’s existing access road to a new receiving substation, and PLS will upgrade its on-site lines to 33kV.
The two companies describe the line’s funding slightly differently. Fortescue says PLS “will fund the entire transmission line and own 20 kilometres of it”, with Fortescue owning the rest. PLS’s announcement says it “will fund and own ~20km of this line”. PLS puts its own spending on the connection and power upgrades at about A$150m: roughly A$20m in its 2027 financial year, A$85m in 2028 and A$45m in 2029. It says the connection is sized above 100MW, well beyond what its planned P2000 expansion needs, leaving room for underground mining or electric haul fleets later.
The deal is not yet unconditional. PLS says it depends on conditions precedent, including a related construction agreement between the two companies being signed and becoming unconditional.
What PLS expects to save
PLS expects the deal to cut its unit operating costs (FOB) by about A$15-20 a tonne compared with the 10-year average P2000 costs it announced recently. Fortescue says the deal will help power PLS’s recently approved A$1.9bn expansion. Neither company has disclosed the price PLS will pay for the electricity.
The power is part of a wider plan to cut emissions at the site. PLS says its power strategy is expected to reduce power-related emissions intensity by up to about 80%, from 0.69 tonnes of CO2 equivalent per MWh in its 2023 financial year to about 0.13 tonnes by 2030. That figure covers the whole strategy, not only this contract.
“We are pleased to partner with Fortescue and become their first external Green Grid customer,” said Dale Henderson, PLS’s managing director and chief executive. He said the deal would improve the company’s “competitiveness and resilience through lithium market cycles”.
Fortescue’s case for selling power
Fortescue’s chief executive, Dino Otranto, framed the grid as a hedge against fuel costs. “Cost. Climate. Control. That’s the case for the Green Grid,” he said. “We used 680 million litres of diesel last year, and every 10-cent rise in diesel prices adds almost US$70 million to our annual costs.”
The company says 550km of a planned 660km Pilbara transmission network is already built. More than 1.3GW of solar and wind and over 1GWh of battery storage are operating or under construction, and the grid is expected to reach 2.4GW of solar and wind, firmed by 4-5GWh of batteries. “PLS is our first customer, with a strong pipeline of others across the Pilbara looking to our Green Grid,” Otranto said.
A first customer, but not firm supply
The detail that matters most for the Pilbara is in PLS’s filing: “Supply under the PPA is not firm.” PLS will keep its existing gas engines, solar, diesel and batteries at the Pilgan and Ngungaju power stations, and will expand on-site generation to cover any interruption. In other words, PLS is buying a large block of cheaper renewable energy, not a guaranteed round-the-clock supply. That suggests Fortescue’s batteries are not yet expected to firm power for outside customers as well as for its own fleet.
That still matters. Pilgangoora, like many remote mine sites, has relied on its own gas, diesel and solar generation. A privately built network that sells surplus renewable power to neighbours offers another option, if more customers follow. Australia’s main grid has already shown how quickly batteries can change the evening peak, as TSN reported when batteries beat gas in AEMO’s latest figures. The Pilbara is not connected to that main eastern grid, which is why Fortescue is building its own supply and transmission.
The economics also shift who carries the risk. PLS is spending about A$150m upfront on a line it will mostly own, in exchange for lower running costs over two decades. That is the same trade other heavy users are making, from data centre operators using green loans to companies signing long-term solar deals in Asia. Projects such as seafloor geothermal tests are still years from that stage.
The next marker is whether Fortescue names a second outside customer before PLS’s line is energised in 2029.
Sources
- Fortescue, “Fortescue signs first green grid power deal, securing 20-year customer”, 27 October 2026
- PLS Group, ASX announcement, “PLS signs long term power agreement to lower costs and emissions intensity at Pilgangoora”, 28 October 2026 (PDF)
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