With more recent guidelines and a strong transition to unlimited management, virtual Power Purchase Agreements (VPPAs) has become the real deal. Let`s break down the operation of virtual power chords into four steps. Start finishing – which makes it very easy to understand. Now, project developers are cutting out a project and selling the parts to several buyers. It is called aggregation — and it has the potential to transform the industry. When aggregating, a developer doesn`t need to find a utility or a large company first. Many buyers can buy together most of the energy that the project will produce, so that the developer can get financing. By cutting the project, buyers who do not need a very large amount of energy can now participate in PPAs. For more information on aggregation, see “What is energy aggregation? – a primer. When a company decides to follow an AAE, the two most common options are a physical or virtual AAE. With a physical AAE – as the name suggests – the company or a designated third party takes possession of the physical energy at a specific delivery point of the electrical grid. The physical energy can then be transferred from that indicated delivery point to the company`s energy account or meter. We have written in detail about traditional corporate PPAs for your enjoyment of reading on our blog.
Before we get into virtual PPAs, let`s summarize some basics here. This breakdown highlights the determinants they should keep in mind when managing risks in your Renewable Energy Sales Contract (AAE). Another aspect that benefits the buyer and the larger market is additionality. This involves adding a new sustainable electricity source to the existing grid. In addition, virtual power purchase contracts, like conventional PPAs, build credits for renewable energy for businesses. You will receive a Renewable Energy Certificate (REC) from the developer for every megawatt hour of electricity generated. Renewable energy certificates are negotiable and non-tangible energy raw materials in the United States, which prove that 1 megawatt hour (MWh) of electricity was generated from an eligible renewable (renewable energy) source and injected into the common system of power lines carrying energy.