Mining companies are moving rapidly into renewables and cleaner power sources. The drivers are clear: National decarbonisation targets, investor expectations and potential cost benefits. Australia’s recently set 2035 goal of a 62-70 percent cut from 2005 levels is placing direct pressure on emissions-intensive sectors like mining, where power and fuel dominate scope 1 and 2 emissions. Investors are also demanding credible transition plans that show real renewable supply, not just offsets, and companies are beginning to see opportunities where clean or hybrid solutions provide additional cost benefits. Change is difficult, and in remote mining regions (i.e. such as the Pilbara), a lack of existing electrical infrastructure, as well as heavy reliance on diesel and gas makes the challenge even more acute.  

Choosing the commercial model which makes the most sense for an operation or mine site to procure renewable energy can be a difficult task. Numerous factors come into play including: 

• Appetite to deploy capital;  
• Project returns;  
• Energy profile (ie intensity and demand); 
• Timing; 
• Control requirements; 
• Capability; and, 
• Risk management.  

Within each of these there are numerous trade-offs to consider. For example, are you better place to deploy capital into a renewables project or preserve balance sheet flexibility? If capital is scarce, or an offtake only model is preferred, how do you best align the PPA with your long term mine plan and energy demand profile – how do you do this and best enable 3rd party investment decisions on a project? Do you prioritise “real” green electrons, or rely on certificates as a transitional step? 

Getting it wrong can mean cost impacts, a lack of control, reputational risk, unreliable energy supply and delayed decarbonisation efforts. 

Choosing the right commercial model  

The energy procurement commercial model a mining company chooses is not a theoretical exercise; it depends on the realities of mine plan, location, and investment and balance sheet strategy. In Australia, we are seeing different models emerge in different industries and contextual circumstances, each with lessons that can be applied in the mining sector. 

Green Certificates and Offsets 

Certificates such as LGCs were more popular in the past, when renewable build options were limited and miners needed a relatively low-cost way to meet compliance or stakeholder expectations, without the accompanying operational challenges. Offsets and green certificates face greater scrutiny today as “paper decarbonisation,” but can still suit mines with very short remaining life or those in regions where renewables cannot yet be deployed at scale. In those cases, certificates and offsets provide a temporary bridge until physical supply is feasible. 

Power Purchase Agreements (PPAs) 

PPAs have quickly become the dominant approach for grid-connected and long-life mines, where electrical infrastructure can be developed onsite (or nearby). A PPA is a long-term electricity supply contract, enabling a fixed price and supply of electricity for a set period, sometimes up to 25 years.  

On-site or near-site PPAs allow an energy developer to build and operate a renewable plant adjacent to the mine, with electricity delivered directly under a long-term contract. These deals reduce capex for the miner, transfer operating risk, and are particularly suited to mines with stable long-term load. This is well established in Australia, noting the DeGrussa Solar Project which was completed in 2016 to supply 16.6 MW of renewable energy to the DeGrussa copper-gold mine via a 6-year PPA.  

Off-site or ‘virtual’ PPAs (VPPAs) have also emerged, especially for grid-connected operations on the east coast, where miners contract financially for renewable generation located elsewhere. VPPAs provide a hedge against market prices and deliver renewable certificates, but they can expose companies to basis risk if local consumption prices diverge from the generation node. A significant example is Rio Tinto’s 25-year PPA with Bungaban Wind Farm which will power its Gladstone aluminium smelter and alumina refineries. Rio Tinto will purchase 80% of Bungaban Wind Farm’s planned 1.4GW capacity, with the remaining capacity supplying the National Electricity Market. 

In practice, both models have gained significant traction. There is a growing appetite to lock in certificates and long-term cost certainty without having to integrate new infrastructure onsite. For diversified majors, these commitments are manageable. For mid-tier operators with narrower portfolios, the risk of being locked into a long-term agreement that outlasts mine life is much harder to carry. 

Leasing and EaaS structures are gaining traction among short-life or mid-tier mines. Instead of owning the assets, miners contract with providers who deliver solar, batteries, or hybrid microgrids on a per-kWh or availability fee basis. This pushes capex and risks onto third parties. Unlike PPAs, which involve a lock in contract to purchase energy for a period of time (often capitalised on the balance sheet), EaaS contracts focus on buying a “whole of energy service” including O&M, offering a greater degree of flexibility and clear delineation of accountability. 

The trade-off is cost: lifetime energy prices are usually higher, but the flexibility is attractive where mine life is uncertain. Providers like Zenith Energy have carved out a niche in this space, enabling miners to reduce emissions without long-term ownership commitments. 

This approach allows reliable, low-emission energy supply while preserving capital for core mining activities. 

Build-Own-Operate-Transfer (BOOT) 

BOOT models are a nascent but emerging middle ground for miners that want long-term control of assets but cannot commit capital upfront. Under this approach, a developer finances, builds, and operates the renewable facility for an agreed period before transferring ownership to the miner. The BOOT model is well suited if a mining company wants to avoid upfront capital expenditure (possibly due to funding availability) and construction risk, while eventually securing control of the renewable energy supply. 

This model is typically seen as a public-private partnership, where the public sector wants a privately financed asset that will eventually become publicly owned. However, whilst uncommon, there is a place for BOOT models in the private market. For producers balancing multiple growth projects, BOOT can free up capital in the early years while ensuring long-term energy security once the mine’s life and profile are clearer.  

Joint Ventures and Co-Investment 

Joint ventures allow miners to co-invest with developers, utilities, or peers to develop large renewable projects or shared infrastructure. They represent a deeper level of commitment than PPAs, but one that comes with both benefits and risks: 

• Strategic trade-off: Co-investment can deliver supply security and potential financial upside, but introduces governance complexity, longer timelines, and the risk that the mine life may not match the renewable asset’s 25–30-year horizon. 

• Current suitability: Best suited to long-life operations seeking stronger ESG credibility or regional clusters (e.g., Pilbara hubs) where pooling demand creates scale economies and spreads risk. 

Self-Build (Owner-Operator) 

At the other end of the spectrum is self-build. Some majors are choosing to fund, build, and operate renewables directly, integrating them tightly within their production systems. This model offers the lowest long-term cost of energy and maximum control but only makes sense for long-life mines backed by strong balance sheets and technical capacity. 

Rio Tinto’s commitment to spend $600-700 million on solar and batteries in the Pilbara shows how majors with scale can take this path. For mid-tier or single asset miners, self-build is rarely realistic: it risks tying up scarce capital in non-core infrastructure and creates long-term exposure to technology and operational risks.  

Closing words 

Renewable procurement models are not a one-size-fits-all choice. Each mining operation faces different pressures including mine life, location, fuel reliance, and capital constraints that shape which options are viable. These strategies also need to evolve as technologies mature, regulations tighten, and investor expectations rise. The most effective approaches are those that combine near-term flexibility with long-term resilience, delivering both cost efficiency and credibility in the eyes of stakeholders. 

Rennie Advisory has deep experience in structuring and advising commercial models across this energy procurement spectrum. By combining transaction expertise, deep mining and energy sector knowledge, as well as advanced financial modelling, we help companies navigate these trade-offs and build procurement pathways that are bankable, adaptable, and aligned with their transition goals. Our collaborative approach ensures solutions are practical to operate while strengthening trust with regulators, investors, and communities.