What is a Power Purchase Agreement?
A Power Purchase Agreement (PPA) is a long-term contract (typically 10-15 years) through which a corporate buyer agrees to purchase electricity and Energy Attribute Certificates (EACs) physically or virtually from a renewable energy generator. EACs—also known as Guarantees of Origin (GOs) in Europe and Renewable Energy Certificates (RECs) in North America—have many different names around the world.
A popular solution for helping businesses migrate toward a net zero future, this powerful tool also helps meet long-term carbon reduction and renewable energy goals and satisfy various stakeholders. There are generally 2 types of PPAs: Direct or Physical Power Purchase Agreements (DPPA) and Virtual or Financial Power Purchase Agreements (VPPA).