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Definition

Renewable electricity power purchase agreement (PPA)

A renewable electricity power purchase agreement is a long-term contract with a specific generator, but it supports market-based Scope 2 reporting only when the agreement transfers the relevant energy attributes to your company.

What is a renewable electricity power purchase agreement?

A renewable electricity PPA sets the quantity, price, delivery, and contract period for electricity from a specific generator. These commercial terms support a market-based Scope 2 claim only if the agreement also transfers the generation attributes to your company.

Why does a renewable electricity PPA matter to you?

A customer, CDP, or an assurance provider may ask what supports your renewable-electricity figure. Keep the agreement, generator, technology, contracted MWh, generation period, consuming sites, emission rate, and certificate retirement records.

How does a renewable electricity PPA work?

Match the PPA output to your use in MWh. If certificates exist, transfer and retire or cancel them for your company. Otherwise, the contract must track the attributes and give your company the sole emission-rate claim. Test the evidence against the Scope 2 quality criteria. Use that rate only for covered MWh. For the rest, use the residual mix, meaning the factor for unclaimed electricity, or the allowed fallback.

What mistakes should you avoid?

  • Assuming the PPA automatically transfers its attributes.
  • Claiming more MWh than the contract and retirement records cover.
  • Using output from the wrong generation period or electricity market.
  • Letting the generator or another buyer retain the same attribute claim.

Is a PPA the same as an EAC?

No. The PPA is the electricity contract. An energy attribute certificate (EAC) records attributes for a defined quantity of electricity and may pass through that contract.

Does a PPA make your location-based Scope 2 emissions zero?

No. It affects only covered market-based MWh. Your location-based total uses each site's grid factor.

What should you send when a customer asks about your PPA?

Send the agreement, generator and technology details, reporting-period MWh, the attribute clause, certificate serial range, and retirement or cancellation proof naming your company.

Example

Hypothetical Hong Kong hotel-group example: Suppose a hotel group in Hong Kong uses 14,400 MWh of electricity in 2026. Its PPA schedule calls for 10,800 MWh, but generator records show only 10,200 MWh of contract output. Certificates retired for the group cover 9,900 MWh.

The documented claim covers 9,900 MWh / 14,400 MWh = 68.75% of use. The remaining 4,500 MWh includes 300 MWh of PPA output without certificate evidence, a 600 MWh shortfall against the PPA schedule, and 3,600 MWh outside the scheduled PPA volume. The group needs the applicable residual-mix or allowed fallback factor for all 4,500 MWh. A contract for 10,800 MWh is not proof of a 10,800 MWh attribute claim.

Where it comes up

CDP 2026 Question 7.30.15 electricity purchases accounted for at a zero or near-zero emission factorCDP Technical Note: Accounting of Scope 2 Emissions, version 12.0, sections 3.2 and 4.2.1, and Question 7.30.15 (checked 2026-08-20)AASB S2 information about contractual instruments relevant to Scope 2 emissionsAASB S2 paragraph 29(a)(v) and paragraphs B30-B31 (checked 2026-08-20)

Related terms

Scope 2 Emissions

Scope 2 emissions are the indirect greenhouse gas emissions from generating the electricity, steam, heat, and cooling your company buys and uses.

Scope 2 quality criteria

A market-based Scope 2 total reflects your electricity contracts, certificates, and supplier choices rather than only the local grid average; the Scope 2 quality criteria are eight GHG Protocol checks for that evidence.

Energy attribute certificate (EAC)

An energy attribute certificate carries the generation attributes of a defined quantity of electricity and can support a market-based Scope 2 claim when it covers the right period and market and is retired or cancelled for one claimant.

Emission factor

An emission factor converts a measured activity, such as kilowatt-hours of electricity or litres of fuel, into greenhouse gas emissions by stating the emissions released per unit of that activity.

Sources

  • GHG Protocol

    PPA definition, attribute transfer, certificate treatment, Scope 2 quality criteria, and market-based calculation

    2026-08-20

  • CDP

    2026 Question 7.30.15, PPA treatment, contractual-instrument reporting, and Scope 2 quality criteria

    2026-08-20

  • Australian Accounting Standards Board

    Paragraph 29(a)(v) and B30-B31 disclosure of contractual instruments relevant to Scope 2 emissions

    2026-08-20

Last verified 2026-08-20

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Renewable electricity power purchase agreement (PPA) Definition | Keslio