The purchase of renewable energy off-site protects against financial risks. 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. With more recent guidelines and a strong transition to unlimited management, virtual Power Purchase Agreements (VPPAs) has become the real deal. Organizations that study the structure of the VPPA generally focus on sustainable business practices, reducing the carbon footprint and investing in renewable energy. As with any investment, the impact of these “green” initiatives is important in assessing their real return on investment. For example, the purchase of unbundled UC is a low-solution solution to meet renewable energy targets. These RECSs are easily accessible, can come from new or existing resources anywhere in the county, from any “renewable” energy resource. The signing of a synthetic AAE with a new solar project is much more efficient, because the long-term contractual obligation to purchase the project`s energy allows the development of the project and the inclusion of the grouped UC recognizes the production of clean electricity. This allows companies to assert that their purchase of renewable energy has a direct and significant influence on the addition of a new renewable energy project.
These effects lead to significant marketing and branding opportunities, and organizations are certainly jumping with it on board. Therefore, virtual electricity supply contracts are an excellent opportunity to develop clean energy projects in newer markets. With financial support from large companies, it will be easier to raise funds for solar installations and wind farms, which encourages small developers to operate. A virtual AAE is a contractual structure in which a buyer (or buyer) agrees to purchase the renewable energy of a project at a price agreed in advance. In dieser Vereinbarung erh-lt das Solarprojekt im Versorgungsma-stab den Marktpreis zum Zeitpunkt des Energieverkaufs. A virtual contract to purchase electricity is then a kind of “contract for differences”. It is signed for the underlying value of energy, not for the physical flow of power. Aggregation is the basis of such an approach. It allows small buyers to partner with huge groups, obtain a purchasing power agreement and thus give life to a renewable energy project. In this way, a synthetic AAE serves as a financial hedge against the volatility of electricity prices. As a general rule, the buyer receives the project`s renewable attributes or renewable energy certificates (RETs). In the absence of physical electricity supply, VPPA is an excellent option for large electricity consumers with a fragmented/distributed electrical charge to support the development of new renewable energy sources.
Step 2: At this point, buyers and developers sign the VPPA contract. They accept all the terms of the agreement for a period of about 10 to 12 years. With the VPPA, the developer has access to the financing needed to build the project. PPAs Versus VPPAs A physical PPP is when the company or a third party takes possession of the physical energy at a specific delivery point of the network.