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Scope 2  ·  3.1.3

Off-Site Power Purchase Agreements

Contracting with an off-site renewable energy generator to procure clean electricity and reduce Scope 2 emissions. The pathway progresses from basic solar or wind contracts through to sophisticated aggregated portfolios with 24/7 matching, emissionality accounting, and advanced market commitments on long-lead development projects.

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Self-Assessment

Select where your organization currently operates and where you want to get to. There is no obligation to reach "Leading Org." — choose the target that is right for your business context and investment capacity.

📍 Current Level
🎯 Target Level
Select your current and target levels above to map your assessment on this initiative.
Fundamental
Market Standard
Above Average
Leading Org.

Technology

  • Solar or wind generation

Process

  • Basic price valuation models and forecasts enabling comparisons of perceived economic value
  • Additionality and/or locationality understood and incorporated into decision making

Financing

  • Tenor of contracts typically 15–20 years
  • RECs arbitraged to lower cost of PPA
  • Contracts may include escalators to account for inflation — consider impact during periods of low or deflationary environment

Technology

  • Solar, wind + storage

Process

  • Evaluation of basis & shape pricing risk along with development and timing risk
  • Renewable penetration forecasts assessed for impact on costs
  • Contracting outsourced to a leading renewable energy financing law firm

Financing

  • Tenor of contracts typically 10–12 years as lenders accept shorter merchant tails ↑ Updated 2026-04-28
  • Blended contracts to provide annual truing up of RECs
  • Locational specific RECs to protect against location-based accounting risk

Technology

  • Solar, wind + storage
  • Aggregated assets and/or offtake

Process

  • Volume or intermittency risk hedged either physically (through storage or NG asset) or financially
  • Retail delivered contracts to avoid mark-to-market accounting risk
  • 24/7 matching of load to demand
  • Emissionality scoring embedded in portfolio RFPs and vendor selection criteria ↑ Updated 2026-04-28

Financing

  • Physically delivered power may be financed as an operational expense on the retail bill
  • Consider credit enhancement for aggregated offtakers via insurance fronting or entity to warehouse offtake
  • Blended contracts to provide 24/7 matching power

Technology

  • Solar, wind + storage
  • Aggregated DER assets
  • SMR / nuclear and other alternative generating assets

Process

  • Emissionality impact understood and assessed with 24/7 matching
  • Optimized portfolios of contracts to avoid over-procuring to meet 24/7 matching
  • Contracts managed over time to continually optimize GHG impact in changing accounting regimes
  • Advanced market commitments (AMCs) on long-lead development projects
  • AI-optimized portfolio contracting to match hourly load with least-emitting generation ↑ Updated 2026-04-28

Financing

  • Consider monetizing tax credits to create additionality on renewable energy
  • Utilize in-the-money contracts to procure long-lead AMCs at higher impact potential

Related Pathways

← All Pathways 2.1.1 Retail Procurement coming soon 2.1.2 Onsite Generation coming soon 2.1.4 Storage coming soon