If you keep up with the latest renewable energy trends, you may have heard the term „virtual power purchase agreement“ (VPPA) thrown around. But what exactly is a VPPA, and why are they so important for the future of sustainability?
To start, a VPPA is a contract between a renewable energy producer and a buyer, typically a corporation, in which the buyer agrees to purchase a certain amount of renewable energy from the producer. The key difference between a VPPA and a typical power purchase agreement (PPA) is that the VPPA is „virtual“ – meaning that the energy is not physically delivered to the buyer, but is instead sold on the open market.
So why would a corporation choose to enter into a VPPA? For one, it allows them to support renewable energy without having to physically purchase and transport the energy themselves. It also enables them to lock in a fixed price for renewable energy, which can help them save money and hedge against future price volatility.
Additionally, entering into a VPPA can be a powerful tool for corporations looking to reduce their carbon footprint and meet sustainability goals. By supporting the development of new renewable energy projects, they can take direct action towards reducing their environmental impact.
While VPPAs are relatively new to the renewable energy market, they are rapidly gaining popularity. In fact, the Renewable Energy Buyers Alliance (REBA) estimates that VPPAs will account for over 80% of corporate renewable energy procurement in the next decade.
So who is leading the charge when it comes to VPPAs? Some of the biggest players include tech giants like Facebook, Google, and Amazon, as well as companies in the consumer goods and retail sectors like Walmart, Nestle, and Coca-Cola. By leveraging their purchasing power and committing to long-term renewable energy investments, these corporations are shaping the market and driving progress towards a cleaner energy future.
In short, a virtual power purchase agreement is a contract between a renewable energy producer and a buyer, in which the buyer agrees to purchase a certain amount of renewable energy from the producer without having to physically receive the energy. VPPAs are a powerful tool for corporations looking to support renewable energy, reduce their carbon footprint, and lock in fixed energy prices. As more companies embrace VPPAs, they are helping to drive the development of new renewable energy projects and accelerate progress towards a cleaner, more sustainable future.