Power Purchase Agreements

• What are renewable power purchase agreements?
• What are Large Scale Generation certificates ?
• What is SECs PPA Offering?
• How do I express interest in an SEC PPA?

What are Renewable Power Purchase Agreements (PPAs)?

A Corporate renewable energy Power Purchase Agreement (PPA) is a contract between a power producer, usually a developer, and a buyer to purchase energy and/or associated Large-scale Generation Certificates (LGCs) generated from renewable sources such as wind and solar.

A Corporate PPA is a financial agreement, not a physical supply arrangement, as the energy generated by the asset is supplied directly to the grid. The buyer settles the contract outside of the market resulting in the supply of energy at a set price for an agreed allocation from the renewable energy project. The settlement of the PPA can be managed by the buyer or by a third party such as an electricity retailer, on behalf of the customer.

There are broadly two types of Corporate PPAs – wholesale and retail intermediated. A wholesale PPA is where the buyer agrees to a financial PPA contract directly with the developer or owner of the generation asset. A retail intermediated PPA is when the retailer is responsible for negotiating and managing the contract with the renewable energy project. Retailers can also sleeve a wholesale PPA into a retail electricity agreement with the electricity retailer managing the settlement and often firming the energy to reduce risk taken on by the buyer.

What are Large-scale Generation Certificates (LGCs)?

Large-scale Generation Certificates are tradeable certificates that are created by renewable energy power stations (e.g. wind or solar farms). Each megawatt hour (MWh) of renewable energy generated creates one LGC.

LGCs can be sold or traded to energy retailers, or other participants, to meet liabilities under the Renewable Energy Target (RET). Alternatively, LGCs can be used to help businesses meet voluntary corporate renewable energy targets such as ambitions to consume renewable electricity.

If you want to report that your business is buying renewable energy, your PPA will need to incorporate the purchase of LGCs and you will need to ensure that for each MWh of energy consumed an LGC is surrendered to the Clean Energy Regulatory (CER).

SEC provides wholesale and retail PPAs matched with LGCs and, for our retail customers, manages the surrender process with the CER to help Victorian businesses meet renewable energy ambitions.

SEC’s Corporate PPA offerings explained

SEC will be offering PPAs to commercial and industrial businesses wanting to procure off-site renewable energy generation to help meet their decarbonisation goals.  SEC PPA offerings will be in market from late 2025.

We will offer both wholesale and retail Renewable Energy Corporate PPAs, providing energy and LGCs linked to a particular named SEC project enabling customers to claim a reduction in greenhouse gas emissions in relation to their electricity consumption.

• SEC Wholesale PPAs – SEC wholesale PPAs are a financial agreement between SEC and a customer where the customer pays a fixed price for energy to SEC for an offtake of generation from a particular SEC asset or SEC PPA. Payments are usually calculated via a contract for difference (CfD) where the contract is settled depending on the difference between the agreed fixed price and the floating spot price. Each MWh of energy is matched with an LGC which is bundled into the PPA. A separate retail contract is required under this scenario as the SEC is not the customer’s retailer.
• SEC Retail PPAs – SEC also offers retail PPAs where we will sleeve a wholesale PPA into an SEC retail electricity agreement or price the retail rates in consideration of a PPA negotiated by SEC. There are a range of ways SEC can price the retail renewable energy PPA which range from fully firmed fixed energy price arrangements to embedding a wholesale PPA into a retail arrangement with SEC pricing in the firming component (i.e. ‘overs and unders’) on either a fixed or variable (e.g. pool pass-through) pricing basis.

If you would like to discuss SEC's PPA offerings, please complete our expression of interest form and we will be in touch.