I looked at the samples and source code and it does show you can use a SharePoint doc library to hold the XML template as a .pnp file when passing in the -Path parameter, however I am getting an error.
Did you ever get this to work. I am revisiting some deployment scripts I successfully tested a few months ago and I am getting the same error - I have created an issue on GIT to follow this up.
Apply-PnPProvisioningTemplate : Object reference not set to an instance of an object. At D:\Dev\Clients\WSL\The Volt SP Starter Kit Non FR\provisioning\Apply-WSLSiteDesignsOrScripts.ps1:69 char:1 + Apply-PnPProvisioningTemplate -Path WSLProvisioningSDTemplate.xml + ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ + CategoryInfo : WriteError: (:) [Apply-PnPProvisioningTemplate], NullReferenceException + FullyQualifiedErrorId : EXCEPTION,SharePointPnP.PowerShell.Commands.Provisioning.ApplyProvisioningTempl ate