Renewable Energy PPA’s For Offsite Solar
It is becoming standard practice for organizations to integrate renewable energy procurement into their core business model. Commercial, industrial and institutional customers are purchasing renewables to meet sustainability goals, fulfill clean energy commitments and limit exposure to energy price volatility.
Today more than ever before, you can take control of your energy costs and gain a competitive advantage with an offsite renewable energy PPA. Contact us to learn more.
Benefits Of An Offsite Power Purchase Agreement
- No upfront capital expenditure
- Solar PPA price per kWh is fixed for all or a portion of your load
- Price hedge against volatile energy markets
- Potential financial gain/cost savings depending on agreement type
- Great for organizations with large, fragmented loads, or limited on site opportunities
Types Of Renewable Energy PPAs
When looking to invest in utility-scale solar development, there are two primary types of Power Purchase Agreements:
Virtual Solar PPA (VPPA)
A virtual power purchase agreement (VPPA), or Synthetic PPA, is a contract for differences based on the solar energy produced by a project. The buyer pays a fixed price (strike price) for the energy and RECs, and the project sells the energy at market prices. If the market price is greater than the strike price, the buyer receives that revenue. However, if the market price is below the strike price the buyer owes the project the difference. The VPPA is a financial contract with no physical delivery of energy, making it a great solution for buyers with fragmented loads, and for those who want a hedge against volatile energy prices.
For those concerned with renewable energy risk management, check out our post on the risks and benefits of a VPPA.
Retail Solar PPA
Another type of renewable energy PPA is the Sleeved or Retail Solar PPA. In a Sleeved PPA, an intermediary utility company handles the transfer of money and energy to and from a renewable energy (RE) project on behalf of the buyer. The utility takes the energy directly from the project and “sleeves” it to the buyer at its location, for a fee. If the sleeved energy is not enough to meet the buyer’s needs, the utility is responsible for supplying the additional power required.
For more details on Retail PPAs, check out our blog post What Is A Sleeved PPA?
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