Scope 1, 2 & 3 Emissions in a UK PPA Model
- jonnyjetsetter
- Jan 20
- 3 min read
A PPA mainly affects Scope 2, but it also has important Scope 3 consequences depending on how it’s structured (on-site vs off-site, physical vs virtual).
Scope 1 (Direct emissions) — limited PPA impact
What Scope 1 looks like for a PPA buyer
Gas boilers for heat
Company-owned vehicles
On-site fuel use
Refrigerant leakage
A PPA may not directly reduce Scope 1, because these emissions are from fuels you burn yourself.
Mitigation actions aligned with a PPA
PPAs become powerful when paired with electrification:
Replace gas heating with electric heat pumps
Electrify fleet vehicles
Electrify industrial processes where feasible
Once electrified, emissions shift from Scope 1 → Scope 2, where the PPA could eliminate them.
Key insight:
A PPA is a Scope 1 enabler, not a Scope 1 solution.
Scope 2 (Purchased electricity) — the core value of a PPA
Scope 2 in a UK PPA
Scope 2 covers emissions from purchased electricity.
Under the GHG Protocol, UK companies must report Scope 2 using:
Location-based method (average UK grid)
Market-based method (contracts like PPAs)
A properly structured PPA affects the market-based Scope 2 figure.
How different PPA types affect Scope 2
1. Physical on-site PPA (e.g. rooftop or ground-mounted solar)
Electricity generated and consumed on site
Zero-emission electricity at point of use
Strongest Scope 2 reduction
Near-zero market-based Scope 2
Partial reduction in location-based Scope 2
Also reduces grid losses and costs
2. Physical off-site PPA (sleeved PPA)
Renewable generator feeds power into the grid
Power is “sleeved” to the buyer via a supplier
Renewable Energy Guarantees of Origin (REGOs) retired for buyer
Zero market-based Scope 2 (if criteria met). Be aware that location-based Scope 2 emissions are still reported using grid average.
3. Virtual / synthetic PPA (VPPA)
Financial contract (CfD-style)
Buyer still purchases grid electricity separately
Receives price hedge + REGOs
Zero market-based Scope 2. However, there is no reduction in location-based Scope 2 with possibly more scrutiny from auditors if poorly structured.
Best practice for Scope 2 credibility in the UK
New renewable capacity
UK-based generation
Long-term contract (10–15 years)
REGOs bundled and retired
Clear claims aligned with GHG Protocol & SBTi
Scope 3 (Value chain emissions) — often overlooked but critical
A PPA can influence Scope 3 both positively and negatively, depending on perspective.
Scope 3 for the PPA buyer
Relevant Scope 3 categories
Category 1: Purchased goods & services
→ Electricity contracts are counted here
Category 3: Fuel-and energy-related activities
→ Upstream emissions from power generation
Category 11: Use of sold products (for some sectors)
Mitigation via PPAs
Choosing renewables lowers upstream energy emissions
Long-term PPAs reduce exposure to fossil-fuel-heavy suppliers
Demonstrates supply-chain decarbonisation to customers
Important:
REGOs alone do not reduce Scope 3 unless tied to real renewable generation.
Scope 3 for the PPA generator
For renewable developers, the buyer’s electricity use becomes:
Scope 3, Category 15 (Investments) or
Category 11 (Use of sold products)
Strong PPA partners:
Improve bankability
Enable new renewable assets
Support credible Scope 3 reductions
Summary: PPA impact by scope
Scope | Impact of a PPA | Key action |
Scope 1 | Indirect | Electrify first |
Scope 2 | Direct & major | Use high-quality PPAs |
Scope 3 | Strategic | Ensure additionality & supplier alignment |
UK-specific reporting & compliance notes
SECR: PPAs improve reported Scope 2
SBTi: PPAs preferred over unbundled REGOs
ISSB / IFRS S2: Contract quality and risk disclosure matter
Green claims: Avoid “100% renewable” claims without robust evidence
What a “gold standard” UK PPA does
✔ Reduces market-based Scope 2 to near zero✔ Enables Scope 1 electrification✔ Supports Scope 3 decarbonisation✔ Meets SBTi additionality expectations✔ Withstands audit and greenwashing scrutiny
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