Wind and renewable PPAs usually involve the transfer of guarantees of origin to the consumer and prove that you have purchased this amount of renewable energy. A virtual ECA is essentially a form of price hedging. A company enters into a contract to pay for a renewable energy project at an agreed starting price. The renewable energy project sells electricity produced from distributors to the local wholesale market. The project is paid to the company if the electricity is sold to the market above the agreed contract price, and the company pays the difference to the project if the electricity falls below the agreed price. Even if your company hasn`t started the discussion on renewables yet, it won`t be long before outside factors force the problem. Even if someone else actually buys the electricity produced by this wind or solar installation, ACME Co. can claim carbon reduction by stopping RECs. The wood in our furniture comes from renewable sources. They are finally starting to invest in renewable energy. In a virtual AAA, the company developing the renewable project sells the electricity to the grid when the project is completed.
To secure financing, the developer finalizes a virtual ECA with a third party – let`s call this part ACME Co. ACME Co. guarantees the owner of the renewable project a certain fixed price for the electricity they sell to the grid. If the electricity is sold for less than the guaranteed amount, ACME Co. will pay the difference; If electricity is sold to the grid for more than the fixed price, ACME Co. will actually make money. In this agreement, there are some benefits for all parties: the developer of the solar installation or wind farm has the price security they need to secure financing for the project, and ACME Co. has the opportunity to earn money. This is a three-year contract renewable for a further period of 12 months if both parties agree.
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