Synthetic Purchase Agreement

18 Dez Synthetic Purchase Agreement

In 2014, Mars, Incorporated, signed a financial PPP with the 118-turbine Mesquite Creek wind farm in Texas, which includes an area as large as Paris, France. This agreement provides enough UC to cover 100% of the U.S. operations on Mars. In 2015, Microsoft signed two children of 20 different years with Enbridges Keechi wind farm in Texas for about 450 million kWh of electricity and another with the wind project piloted by EDF Renewable Energy in Illinois for about 430 million kWh.1 The Virtual Power Purchase Agreement (VPPA), also known as synthetic PPA, is a contractual structure under which a buyer (or buyer) agrees to purchase the project`s renewable energy at a fixed price, while the project gets the variable market. If the fixed price of the VPPA is higher than the actual market price, the project pays the difference to the buyer. If the market price is higher than the VPPA price, the project company maintains the difference. In this way, a VPPA is a financial hedge against the volatility of electricity prices. In a virtual AAE, the buyer usually receives the renewable attributes of the project, but does not accept the physical supply of energy. The buyer continues to purchase their electricity through their local supplier. A supply-scale solar VPPA allows large electricity consumers with fragmented/distributed electricity charges to enjoy the benefits of renewable energy. Electricity producers enter into AAEs either bilaterally with a consumer company (“Corporate PPA”) or with an electricity distributor who purchases the electricity generated (“Merchant PPA”). The electricity distributor can continue to supply electricity to an electricity consumer (transform it again into a “corporate PPA”) or to negotiate electricity on an electricity exchange. Many international groups are already buying shares in their electricity consumption via AAAs or have announced their intention to do so more frequently (see there100.org/re100).

They use AAEs to obtain stable and predictable electricity prices. AAEs are an effective way to reduce the risk of electricity prices, particularly for operators of high-investment and low-cost facilities (such as photovoltaic and wind power plants). Since electricity payments are already insured to some extent, facility managers and financial banks may be more confident that revenues from the sale of electricity will effectively cover investment costs. This makes the project more cost-effective in the long run.

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