Adopting renewable power purchase agreements for Scope 2

Decarbonization · Industrial practice · Updated 2026-06-01

Adopting a power purchase agreement (PPA) is the practice of contracting directly for renewable electricity to cut a site's Scope 2 emissions, rather than relying only on grid supply and unbundled certificates. It provides a long-term, often fixed-price route to genuinely lower-carbon power and supports credible emissions reporting.

What it is

A renewable PPA is a long-term contract to buy electricity, or its associated environmental attributes, from a specific renewable generator. It can be a physical agreement delivering power to the site or a financial arrangement that hedges price while transferring the renewable attributes. As a decarbonisation practice it is the deliberate procurement decision that reduces the carbon intensity of purchased electricity, which dominates Scope 2.

Why it is done

Purchased electricity is usually the largest part of a manufacturer's Scope 2 footprint, and buying ordinary grid power leaves that footprint at the grid's carbon intensity. A PPA lets a site secure renewable supply at scale, often locking in price certainty against volatile markets, and provides the additional, traceable claim that strengthens emissions reporting compared with simply buying unbundled certificates.

How it is done

The site first establishes its electricity demand profile and Scope 2 baseline, and clarifies its reporting and additionality requirements. It then evaluates the contracting options — on-site generation, a physical or a financial PPA, or a green tariff — against price, term, risk and the strength of the renewable claim each provides. A structure is selected and contracted, and the renewable attributes are tracked and reflected consistently in the carbon accounts.

1. Profile electricity demand
2. Set Scope 2 baseline
3. Define reporting needs
4. Evaluate PPA options
5. Contract the structure
6. Track and report attributes

What to watch for

Double-counting renewable attributes, or claiming reductions from certificates that lack additionality, undermines the credibility of the Scope 2 claim. Signing a long-term price commitment without understanding the site's future demand profile, or confusing financial and physical structures, are the commercial traps.

Related practices

Related topics

Scope 1, 2 and 3 Emissions for Manufacturers · Carbon Intensity · Net Zero · Carbon Footprint

Common in: Food Processing · Chemicals · Pharmaceuticals · Steel & Metals · Cement

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