A virtual PPA, or power purchase agreement, is a type of agreement in which an organization agrees to purchase a certain amount of electricity from a renewable energy project at a set price, without physically taking delivery of the energy. Instead, the company is buying the renewable energy attributes associated with the project, such as renewable energy credits (RECs).
Within a virtual PPA contract, the corporate buyer does not own and is not responsible for the physical electrons generated by the project. The virtual PPA is solely a financial transaction, exchanging a fixed-price cash flow for a variable-priced cash flow and renewable energy certificates (RECs). As the agreement is purely financial, the buyer still needs to meet its electricity load through traditional channels—therefore, the virtual PPA allows the buyer’s relationship with its utility at the retail level to remain unchanged.
Virtual PPA systems have become increasingly popular as a way for companies to meet their renewable energy goals and reduce their carbon footprint. By purchasing the renewable energy attributes of a project, companies can claim that they are using renewable energy, even if the energy is not directly delivered to their facility. This allows them to offset their greenhouse gas emissions and meet their sustainability targets.
Read: What is a Sleeved PPA?
VPPAs are typically used by large companies, such as those in the technology, retail and finance sectors, that have a significant energy consumption. They can also be used by municipalities and other public entities as energy solutions.
Benefits of virtual PPAs
VPPAs offer several benefits for companies. They allow companies to set a fixed price for renewable energy, which can provide price stability and reduce risk. They also allow companies to meet their renewable energy goals without the need to invest in and maintain their own renewable energy projects. Additionally, VPPAs can help to develop new renewable energy projects by providing long-term revenue streams for developers.
A virtual PPA can be used in conjunction with other renewable energy procurement options, such as green tariffs, which are special tariffs offered by utilities that allow customers to purchase renewable energy. Further, virtual PPAs can also be used in combination with on-site renewable energy generation, such as solar panels, to additionally reduce a company’s carbon footprint.
Interested in power purchase agreements?
Virtual PPAs are becoming increasingly popular as a way for companies to meet their renewable energy goals and reduce their carbon footprint, by purchasing the renewable energy attributes of a project. With tax credits and other incentives available, now is the ideal time to begin a clean energy project like a PPA for your organization. If you are interested in solar technology, EnergyLink has the capability to handle not only the funding phase but also designing and building. Click the link below to learn more or speak to a team member at (866) 218-0830. Want to stay up to date on the latest energy news? Click the link below to sign up for our newsletter.