This is the start of a new series from our team at Renewable Choice Energy, answering the most common renewables questions and providing insight on how companies can capture the benefits of clean energy. First up: An overview of power purchase agreements (PPAs) and energy attribute certificates (EACs).
What Is a PPA?
A power purchase agreement (PPA) is a long-term (12-20 years) contract between a renewable energy developer and a dedicated, creditworthy buyer. PPAs enable developers to secure financing for new wind or solar projects and allow buyers to save money on their energy costs by locking in predictable pricing from clean energy sources.
Who Are PPA Buyers?
Commercial, industrial and institutional (C&I) buyers first began using PPAs in 2008. Since then, these buyers have collectively brought nearly 6 gigawatts of renewable energy to the global grid.
Corporate PPAs have the potential to insulate C&I buyers against volatile conventional fuel costs, result in significant emission reductions and help buyers meet sustainability goals by stimulating renewable energy development.
What Is Direct vs. Virtual?
Direct PPA projects are located in the same grid region as the buyer’s operations and the buyer takes direct delivery of the clean energy from the grid. Virtual PPA projects can be located anywhere and the buyer does not take physical delivery of the clean energy. Both types of PPAs retain their financial and environmental benefits.
What Are EACs?
An energy attribute certificate (EAC) is a free market instrument that verifies 1 megawatt-hour of renewable electricity was generated and added to the grid from a green power source.
EACs are the leading way that global companies acquire, track and trade renewable energy. When bundled with purchased electricity, EACs enable buyers to make renewable electricity utilization and marketing claims.
Where Are EAC markets?
Energy Attribute Certificates exist in global markets. They are known as renewable energy certificates (RECs) in North America, guarantees of origin (GOs) in the European Union, and I-RECs or tradeable instruments for global renewables (TIGRs) in developing international markets. With recent updates to the Greenhouse Gas Protocol Scope 2 Guidance, multinational organizations are now sourcing renewable electricity products in markets matching their operational locations across the world.
Who Buys EACs?
The world’s largest global organizations purchase EACs. As most businesses are unable to source renewable energy directly, they rely on EACs to reduce their Scope 2 emissions, claim environmental attributes of renewable electricity, and meet their sustainability commitments and goals.
Want to learn more about the value of power purchase agreements? Download the whitepaper: Accelerate Your Energy Strategy with Power Purchase Agreements. And for more information on how some of the largest companies in the world meet sustainability goals using EACs, click here.