Power Purchase Agreements (PPAs)
PPAs help companies source renewable energy without having to invest in infrastructure, like solar panels or wind farms, making it a cost-effective solution for reducing greenhouse gas emissions linked to energy.
Accelerate Renewable Energy Expansion
Enhance Energy Sustainability With Tailored PPAs
PPAs are direct contractual agreements between energy buyers and producers with third-party involvement.
Large power consumers, such as manufacturers, enter into long-term supply contracts with renewable energy producers. Utilities can close PPAs for their consumption (cities, communes).
The energy buyer agrees to purchase electricity directly from the renewable energy generator at a fixed rate over a set period, usually 5 to 15 years. This agreement allows businesses to secure clean energy at predictable rates, protecting them from the volatility of traditional energy markets.
PPAs support the development of renewable energy projects by providing bankability and a secured revenue source for renewable energy producers. Companies meet carbon reduction targets by implementing actions with high additionality.
Physical PPA vs. Virtual PPA
Physical PPAs: Direct purchase of energy.
A physical PPA is a contract in which the buyer receives and takes legal title to the electricity generated by a renewable energy project. This arrangement has a direct physical connection between the renewable generator and the corporate buyer, typically within the same grid or load zone.
o Energy Producer generates renewable energy (e.g., wind, solar).
o The energy is delivered directly to the grid and physically received by the Company (Energy Buyer) for use in their operations.
o The buyer receives the renewable energy physically while benefiting from stable energy prices over the contract term.
Virtual PPAs (VPPAs): Financial agreements to support renewable projects.
A virtual PPA (VPPA) is a financial contract without physical electricity being delivered to the buyer. Instead, the renewable energy project sells its electricity to the local grid at market prices, while the buyer purchases electricity from their regular supplier.
o Energy Producers generate renewable energy and sell it on the open market instead of delivering it directly to the buyer.
o The Company (Energy Buyer) purchases Renewable Energy Certificates (RECs) and participates in a financial settlement to claim the environmental benefits while still receiving energy from the grid.
o The buyer benefits from renewable energy attributes without the physical delivery of the energy.
PPAs: How does GO2 Markets support?
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