Virtual Power Purchase Agreement Sample

Once you have identified a renewable energy project that meets your organization`s requirements and are ready to continue with a Virtual Power Agreement for Purhase (VPPA), the terms of the contract will be indicated to you. By opening negotiations, you indicate your intention to obtain the energy generated by the project. In return, the project proponent will generally agree not to sell this portion of the energy to other buyers for 90 days, giving you time to verify the technical information related to their installation and negotiate the legal and financial terms of the contract that are important to your organization. An electricity purchase agreement (PPA) is a contract between an energy buyer and the developer of a renewable energy project that has not yet been built. In the contract, the buyer guarantees that the developer will receive a fixed price for his energy, and in exchange, the buyer will receive renewable energy credits (RECs) for every megawatt-hour of clean energy produced and sold. PPAs are long-term contracts with a duration of 12 to 20 years that allow the developer to provide long-term financing and build the project. 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. 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. And without limits? Well, it`s all these days. They do not want to limit themselves to a certain geography. To acquire a virtual contract, the company must not be physically in the same jurisdiction as the electricity market. As long as electricity is sold to a deregulated grid, you can be virtual with VPPAs. Electricity supply agreements, particularly VPPa, can cause internal accounting problems. Although we cannot offer accounting advice in this blog, there are many structurings and executions of all kinds of organizations. We advise you to discuss the impact on accounting at an early stage with your accountant to ensure good internal accounting treatment.