In recent years, corporations have set new records for clean energy purchased worldwide—but we still need to do better in order to meet our Paris Agreement targets. A virtual power purchase agreement can help your organization become a leader in the fight against climate change by helping Canada transition to renewable energy.
Virtual power purchase agreements (VPPAs) enable organizations across Canada to contract directly with renewable energy project developers in Alberta’s deregulated market. In other words, VPPAs help companies procure renewable power from a specific wind farm or solar array that they helped get off the ground.
Organizations sign VPPAs to shrink their carbon footprint and tell a compelling, verifiable sustainability story. With the right expertise to mitigate risk, VPPAs can also act as a hedge against volatile energy prices and provide insulation from rising power costs.
What are VPPAs?
VPPAs are financial agreements between an energy buyer and a renewable energy project developer. In these contracts, the buyer guarantees the developer a fixed price for energy from a project that hasn’t been built yet, such as a wind farm or a solar array. For this fixed price, the buyer receives renewable energy certificates (RECs) from the project. VPPAs are long-term contracts that can last 10 to 15 years. Currently, most contracts span about 10 years.
With a VPPA, energy does not physically flow from the renewable project to the buyer. Instead, the project sells its energy into the wholesale power grid and the buyer continues to procure power from its utility as usual.
How does pricing work?
VPPAs are inherently risky—depending on power pool prices in the market where the project is located, the buyer might win or lose money on the deal. But there are various ways to mitigate that risk. Contact us at firstname.lastname@example.org to learn which risk mitigation strategies will benefit your business.
With a VPPA, one party will pay the other the difference between the wholesale energy price and the predetermined VPPA price. If energy prices are lower than the VPPA price, the buyer will pay the developer; but if energy pool prices are higher than the VPPA price, the developer will pay the buyer. In either case, the buyer earns renewable energy certificates (RECs) and the right to say that they’re powered by renewable energy.
How Bullfrog helps
Bullfrog Power is Canada’s leading green energy provider. Our team can help your organization evaluate its energy needs and determine if a VPPA is the best fit.
If you choose to procure renewable energy with a VPPA, Bullfrog can help you:
Select the best project for your needs
Assemble buying groups
To find out how a VPPA could benefit your organization, contact us at email@example.com.