How does the need for an AFSL arise?
One of the key issues for entities participating in the financial PPA space is whether their activities require them to obtain an Australian Financial Services License (AFSL).
Whilst this requirement is clear for electricity retailers entering into numerous PPAs, a deeper analysis and clearer guidance is necessary for corporates or generators, some of which are established as special‑purpose vehicles for specific developments. Under the Corporations Act, derivatives are expressly categorised as financial products and often, the transactions contemplated by a PPA fall within the definition of ‘derivative’ as it involves a Contract for Difference. However, the extent to which the activities are conducted determines whether they can be deemed as ‘carrying on a financial services business’.
Legal advice should be sought to confirm whether a transaction is likely to trigger the AFSL requirement. If none of the exemptions apply, to comply with the Corporations Act, your business can engage Energetics’ AFSL intermediary services.
Conducting due diligence to maintain PPA compliance |
| As an AFS licensee, Energetics under the Act, has a general obligation to do all things necessary to ensure that financial services are provided efficiently, honestly and fairly. Arranging the issue of derivatives under an Intermediary Authorisation must comply with the same financial services law obligations. |
Ensuring obligations are met |
| We aim to ensure that parties to an electricity derivative transaction have sufficient financial resources to ensure they can meet obligations under the Act. Our AFS licensee general obligations include:
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Additional support services |
| Energetics can help with a more comprehensive set of PPA transaction support services such as:
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