A virtual AAE is a contractual structure in which a buyer (or buyer) agrees to purchase the renewable energy of a project at a price agreed in advance. In dieser Vereinbarung erh-lt das Solarprojekt im Versorgungsma-stab den Marktpreis zum Zeitpunkt des Energieverkaufs. What is there for the buyer of the business? I have it, they need something to fuel their final score. It is the notion of “hedging” that comes into play. Regardless of the prices on the open market, the buyer always benefits from a fixed tax rate. It is therefore protected from price fluctuations. In a virtual AAE, the company that develops the renewable energy project sells the electricity to the grid once the project is completed. To obtain financing, the developer enters into a virtual PPP with a third party – let`s call the ACME Co. ACME Co.dem owner of the renewable project guarantees a certain fixed price for the electricity it sells 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 earn money.
In this arrangement, there are some advantages for all concerned: the developer of the solar installation or wind farm has the price security he needs to get funding for the project, and ACME Co. has the opportunity to earn money. The purchase of renewable energy off-site protects against financial risks. Unlike the traditional UNbundled purchase of the REC, which always costs money, the VPPA swap offers UC at a price determined by the net difference between the fixed price of the VPPA and the wholesale price. A positive difference between the market price and the fixed price of the VPPA can result in significant positive cash flows. In many previous VPPAs, the fixed price of the VPPA was below or above the market price, and the buyer had to review the price forecasts to determine whether the project would ultimately provide a positive NPV. There are now markets and projects in which it is possible to guarantee a fixed VPPA price below the current market price, which means that the virtual PPP will generate a positive cash flow from day one. To obtain financing for a project, developers must first find a buyer for the majority of the energy that the project will produce.
Historically, developers would find a supplier or a large company to buy most of the energy, and then, if the energy remained low, they would sign an AAE with a small company. This has made it extremely difficult for a small business to find a developer willing to sell them exactly the right amount of energy. Now, project developers are cutting out a project and selling the parts to several buyers. It is called aggregation — and it has the potential to transform the industry. When aggregating, a developer doesn`t need to find a utility or a large company first. Many buyers can buy together most of the energy that the project will produce, so that the developer can get financing. By cutting the project, buyers who do not need a very large amount of energy can now participate in PPAs. For more information on aggregation, see “What is energy aggregation? – a primer. A virtual energy sales contract is a long-term contract between a company and a developer.