Since June 2021, surging electricity prices driven by rising wholesale, network, and generation costs have made it increasingly difficult for Australian businesses to meet decarbonisation targets without escalating their cost base.
Since June 2021, retail electricity prices have risen 40-50 per cent, depending on the state, largely due to rising wholesale and network costs. The rise in wholesale prices over this 4-year period reflects higher fuel costs and higher technology costs across all electricity generation technologies. This has occurred alongside increases in the general cost of living.
Given this context, many Australian businesses are struggling to achieve their decarbonisation targets whilst limiting increases in their cost base.
Many businesses are delaying achieving their decarbonisation targets, prioritising operational efficiencies and other cost-out initiatives. However, there are opportunities to both reduce costs and help achieve decarbonisation targets, by structuring renewable energy contracts to reduce retailer margin exposure.
This article outlines:
Commercial and Industrial (C&I) electricity consumers have two broad electricity procurement options:
Understanding the risks and rewards of these two options from a C&I customer’s perspective is critical - particularly when considering contracts with a strong renewables component.
Despite the rise in electricity prices in recent years, renewables remain the cheapest source of electricity. The key is knowing how to capture that value.
Wholesale renewable contracts (or power purchasing agreements, PPAs) used to be only accessible to the largest energy users. This is no longer the case, wholesale PPAs are now available to a wide range of C&Is, large and small. Examples include Aldi, Coles, Amazon, Google, Telstra, Optus, Ikea, Coca-Cola, Baptist Care, and Brisbane Airport, to name just a few.
In addition, retailers increasingly offer retail PPAs.
There are five main PPA types:
1. Retail PPA – Fully firmed
The most common form of PPA for first-time corporate buyers is the fully firmed retail PPA. Under this structure, the retailer delivers a standard load-following retail contract, albeit linked to renewables output, and also manages all of the ‘firming’: periods of time where renewables supply does not match C&I demand.
For the C&I customer, this contract is simple, predictable and in turn lowest-risk. However, it is more expensive than the subsequent PPA options as the retailer ‘does it all’. These contracts typically run between 1 and 5 years and are best suited to smaller or mid-sized C&I loads seeking a low-risk entry point into renewables-linked procurement.
2. Retail PPA – Progressively firmed
A progressively firmed PPA is another retail structure which offers more strategic control to the buyer. Rather than locking in a fixed price for a given volume over the contracting period, the PPA buyer progressively purchases power in quarterly or yearly blocks, often linked to ASX futures pricing. This adds a layer of complexity and exposure - the buyer must actively manage timing of their progressive purchases - but can deliver cost efficiencies if well structured.
It's a good fit for buyers who:
3. Tripartite PPA – Wholesale + Retailer-firmed
For C&Is seeking more control over their renewables procurement, but not ready to fully ‘cut the cord’ with retailers, a tripartite PPA offers a practical middle ground. There are three parties (hence ‘tripartite’) and two contracts both involving the C&I organisation:
a. A long-term wholesale PPA (typically 10+ years) between the C&I customer and a renewables project developer or generation business, and
b. A retail contract between the C&I customer and a retailer, under which the retailer’s energy services are limited to firming and sleeving (‘sleeving’ refers to the passing through and in turn surrendering of LGCs from the project developer to the C&I customer).
This approach offers C&I customers cost savings by reducing their reliance on a retailer for ‘bulk energy’ service provision but requires more internal capability and capacity in terms of interfacing the two contracts and interacting between project developer and the retailer. Moreover, only some retailers offer firming- and sleeving-only services.
Recent examples include the 10-year ZEN Energy-ACEN Renewables-BOC tripartite agreement, where the wholesale PPA relates to 23 per cent of ACEN’s New England Solar Farm’s output.
4. Fully-wholesale PPA
Many C&Is are now contracting directly with project developers for both ‘bulk energy’ and firming services. These fully-wholesale PPAs vary in terms of whether firming services are bundled in with bulk energy provision or separately contracted:
a. Bundled-in: these are increasingly able to be provided by PV-BESS hybrid project developers, like Edify Energy’s 20-year contract with Rio Tinto relating to its PV-BESS DC-coupled Smoky Creek & Guthrie’s Gap project.
b. Separately contracted: C&I buyers contract bulk energy (incl. LGCs) with renewable project developer, typically on a run-of-meter, pay-as-produced basis. And then firming services are contracted separately. This approach is used by organisations with the capability to monitor, hedge, and adapt to market conditions.
Rio Tinto’s 25-year wholesale PPAs with European Energy (Upper Calliope SF) and with Windlab (Bungaban WF) are notable recent examples of energy + LGC-specific contracts, where the mismatch between these generators’ output and Rio’s demand is managed by Rio through separate and subsequent contracts including their contract with Edify Energy.
5. 100% renewable PPA (“fully renewable PPA”), including 24/7 time-matched contracts
A variant on the above is 100% renewable PPAs, which require renewable output to equal the buyer’s consumption over a period of time. Historically, this period was typically monthly or quarterly. This then meant there were intra-month / intra-quarter periods where renewable output did not equal consumption; this difference was typically not required to be met by renewables-powered firming sources.
Fully-renewable PPAs can be either retail or wholesale in nature.
A key innovation within this category is the emergence of 24/7 PPAs, which raise the bar on time-matching between generation and demand.
Like 100% renewable PPAs, 24/7 PPAs can be either retail- or wholesale-supplied.
Their key point of differentiation from 100% renewable PPAs is in the requirement for matching of renewable supply with C&I customer demand on a higher time frequency basis: typically, every day or every hour. This then means that the firming is more likely to be provided by renewables-powered technologies such as storage rather than gas-powered generation (GPG). 1
24/7 PPAs are more complex and costly than less time granular 100% renewable PPAs, but also deliver the strongest carbon alignment and reputational value.
We see demand for 24/7 PPAs emerging from two buyer cohorts:
1 We say ‘more likely’ as there remains the ability for intra-day or intra-hour firming to be provided by GPG.
As the above examples and options demonstrate, choosing a PPA is no longer just about price. Each structure requires different levels of internal expertise, procurement flexibility, and risk tolerance. The right fit depends on what you're solving for: emissions certainty, price predictability, reputational value, and / or operational control of the asset being contracted.
PPAs, but also deliver the strongest carbon alignment and reputational value. We see demand for 24/7 PPAs emerging from two buyer cohorts:
As the above examples and options demonstrate, choosing a PPA is no longer just about price. Each structure requires different levels of internal expertise, procurement flexibility, and risk tolerance. The right fit depends on what you're solving for: emissions certainty, price predictability, reputational value, and / or operational control of the asset being contracted.
Understanding contracting options is only half the picture for C&I energy buyers. The next step is working out which model actually suits your organisation.
The five filters below can help guide the decision as to which PPA option fits your organisation’s capabilities, priorities, and risk appetite.
1. Internal capability & capacity
Does your team have the requisite and sufficient internal capabilities to manage PPAs?
2. Exposure to spot price volatility
How averse is your organisation to risk?
3. Cost certainty vs. cost minimisation
Is your business prioritising cost savings or cost certainty?
Note: 24/7 PPAs are not typically pursued for cost savings. While they can offer long-term price visibility, their primary value lies in emissions alignment and reputational differentiation - and they generally come at a higher per-MWh cost.
4. Market availability / liquidity
How much time can you spend to find the right PPA structure?
5. Commitment horizon
What’s your appetite for a long-term deal?
Emissions alignment as a parallel consideration
While not shown in the table below, emissions alignment is a key factor for organisations with Scope 2 reporting goals or voluntary commitments (e.g SBTi, RE100). Not all PPAs deliver equal carbon outcomes.
Strong alignment depends on:
24/7 PPAs offer the clearest emissions alignment, because generation must match consumption on an hourly basis - but come with greater cost and complexity.
The table below summarises trade-offs across the key filters, helping C&I buyers compare structures at a glance.
Green indicates a favourable characteristic, yellow is neutral, and red indicates a less favourable characteristic of that PPA type.
A global top 10 mining company set an ambitious goal: Power its Australian operations with 100% renewables by 2030 and reduce operational emissions by 30%. Furthermore, the leadership wanted to accelerate progress, but without paying a green premium above forecast energy costs.
To evaluate the most cost-effective and risk-aware way forward, the company engaged CORE Markets to assess its options and execute a competitive sourcing process.
The outcome:
While electricity prices are expected to moderate somewhat from current highs over the next 2-3 years, as new renewables and new transmission capacity come online, there is also expectation of rising price volatility. In volatile conditions, the timing of contracting becomes more important and much harder to get right without visibility on contract prices and structures.
Buyers who treat electricity procurement as a living strategy and who do not adopt a set-and-forget approach, are better positioned to manage the at-times competing objectives of cost minimisation and decarbonisation. They don’t just react when the market moves. They’re ready for it.
Whether you're approaching procurement or planning for what’s next, CORE Markets’ Energy Procurement Intelligence Package helps you see clearly and act confidently. Get in touch with us if you’d like to find out more.
Smarter energy buying in a high-cost, high-pressure market
