Structuring Virtual Power Purchase Agreements: Transaction Risks, Regulatory Considerations

This CLE course will discuss structuring large corporations' virtual or financial power purchase agreements (PPAs). The panel will guide counsel on the different factors when structuring virtual PPA transactions, how they compare to physical PPAs, benefits for purchasers, available risk mitigation strategies, and an overview of the shifting regulatory environment impacting these transactions.

PPAs, a mainstay of the renewable energy landscape, are contracts for selling electricity and the associated renewable energy certificates (RECs) to a corporate or industrial buyer by a developer or project owner. For corporate entities, PPAs can be powerful tools in providing a long-term hedge against volatile energy prices and achieving sustainability goals.

Unlike physical PPAs, where the buyer (or off-taker) takes legal title and delivery of the energy and RECs, virtual PPAs allow the buyer/off-taker to provide financial support for the power output at a fixed price and retain the RECs without taking actual delivery of the power. The seller typically liquidates the energy at market-level pricing to a third party and transfers any net revenue generated to the VPPA buyer.

While PPA transactions are increasingly common in the marketplace and virtual PPAs may avoid some risks associated with retaining title to purchased energy, there remain significant regulatory and risk factors to address to realize these deal's financial, environmental, and transactional benefits structures.

Listen as our panel of expert practitioners offers best practices for structuring virtual PPAs, critical terms for inclusion, and the best way to mitigate the risks inherent to these transactions.