Glossary of Key VPPA Terms

Virtual Power Purchase Agreement (VPPA): A contract between a power producer and a corporate buyer for renewable energy where the buyer agrees to a fixed price for power but does not get delivery of power; instead, the buyer gets delivery of corresponding Renewable Energy Certificates (RECs) and the energy is sold as brown power in the wholesale market. The final settlement is based on the difference between the selling price of brown power and the buyer's fixed price agreement.

Renewable Energy Certificates (RECs): Tradable certificates that represent proof that a certain amount of electricity was generated from renewable sources.

Strike Price: The fixed price agreed upon in a VPPA, which determines financial settlements based on market fluctuations.

Wholesale Market: A decentralized market where buyers and sellers transact directly without a centralized exchange.

OTC (Over-the-Counter) Market: A digital platform for buyers and sellers of power in the OTC market.

Brown Power: Electricity generated from non-renewable sources, or renewable energy sold in the market without its green attributes, i.e., renewable energy is sold in the market as brown power while its green attributes are sold separately in the form of RECs.

Financial Settlement: The process where the VPPA buyer either pays or receives the difference between the fixed strike price and the fluctuating market price.

Digital Ledger for VPPAs: A digital recordkeeper available on OTC Platforms to maintain centralized digital records for all your VPPAs, REC exchanges, and calculate/reconcile net positions, ensuring streamlined operations, real-time monitoring, and compliance.