How to benefit from renewable energy power purchase agreements – an explainer


What is a RE PPA?

A Renewable Energy Power Purchase Agreement, sometimes abbreviated to RE PPA, generally creates a partnership between a business and a solar or wind farm.

A long term contract whereby the buying business is guaranteed a fixed rate for electricity and or green certificates.

The partnership sees the pair enter into a long term contract whereby the buying business is guaranteed a fixed rate for electricity and or green certificates for the duration of the contract, which tends to last for a decade or so.

“RE PPAs can be a powerful tool to reduce greenhouse emissions, exposure to volatile electricity prices, and electricity bills,” Chris Briggs and Jonathan Prendergast from Business Renewables Centre-Australia wrote in a recent contributed Spinifex article on The Fifth Estate.

The RE PPA enables the business to access the renewable energy without the upfront cost of installation or maintenance.

“The two parties agree on a fixed ‘strike price’ for the PPA and each month one party pays the other based on the difference between the PPA and wholesale electricity prices.”

What are the variations?

photo of a solar farm from above

For most businesses the choice typically falls between a Wholesale PPA (directly with a solar or wind farm) or a Retail PPA (buying from a solar or wind farm through a retailer).

However, Mr Briggs and Mr Prendergast highlight that many variations exist – as many as 288 types in theory, according to one study by the University of New South Wales.

There can also be a lot of confusing jargon surrounding the options, they point out, including “virtual”, “modified virtual” and “sleeved”.

Many find them confusing, Mr Briggs and Mr Prendergast say, “and the transaction costs can be significant, they say.

Where can you find out more?

To help people better understand and find opportunities related to RE PPA’s, WWF, Climate-Kic and the Institute for Sustainable Futures, the University of Technology together established the not-for-profit initiative Business Renewables Centre Australia (BRC).

Created with funding from the Australian Renewable Energy Agency and the NSW and Victorian governments, the BRC is a platform designed to simplify and accelerate corporate purchasing of renewables and storage.

“The BRC is helping connect renewable energy buyers and sellers,” Mr Briggs said, “with over 7000MW of projects listed on the online marketplace platform – that’s over 10 times the size of large-scale renewable energy projects that were built last year and almost three times the size of projects currently under construction.”

screenshot of a map from the BRC-A website

The BRC-A’s member’s portal provides a visual marketplace to facilitate RE PPA deals.

The site is useful for businesses, developers and buyers alike, offering guides for better understanding as well as search functions geared for putting different parties in contact with one another.

BRC is a free resource, simply become a member to access and find out more.