Volatility Demands Smarter Strategy
If you have been shopping for retail power in Texas, then what we are about to report will not...
Power Purchase Agreements (PPAs) and Virtual Power Purchase Agreements (VPPAs) have become an important way in which businesses advance their sustainability goals. A PPA is an agreement between a buyer and seller, typically for behind-the-meter, physically delivered electricity at a specified price over the term of the contract. PPAs are often long-term contracts between a renewable power developer and a client that agrees to receive the output of that renewable power asset, such as a solar array. VPPAs are a specific type of PPA where the purchaser does not physically receive the output of a given renewable asset. These transactions are financial instruments that are commonly structured as a contract for differences, also known as a swap, and they are classified as financial derivatives under the US generally accepted accounting principles (GAAP).
PPAs and VPPAs are complex agreements with language and terms that are not familiar to most commercial and industrial clients and their legal teams. 5 has written, reviewed, and negotiated numerous PPAs and VPPAs for clients across North America. The long-term nature of these contracts (often 10 to 20 years) requires an exacting review of the terms and conditions and a thorough understanding of how the client will be bound to the PPA/VPPA seller.
Many businesses have turned to 5 to incorporate PPAs and VPPAs into their sustainability plans. These clients have benefited from 5’s extensive experience in developing and negotiating these complicated contracts while taking steps to reduce their carbon footprint.
Contact Us to learn more about how 5 can help with your PPA and VPPA needs.