A Power Purchase Agreement or a PPA for short, is a contract between an energy generator, like a wind or solar farm, and an energy user, like a family or business. This type of agreement has been used within the energy industry for years and years for trading energy between market participants. Increasingly though they have been used by businesses to buy renewable energy for themselves to use.
Buying the electricity that you need directly from the generator of that energy brings a new level of transparency to the industry, enabling the energy user to track exactly where their money is going, and being certain that your money isn’t being spent on fossil fuels without your knowledge.
The advantage of a PPA over a normal energy supply contract is that you have the power to choose where your electricity comes from. You can decide to buy electricity from your local independent wind farm, the price you want to pay for it and how long you want to buy it from them.
Although the contracts will look different, the key terms within a PPA will be familiar to anyone:
- Start date (sometimes called effective date)
- Payment terms
- Price paid and billing cycle
- Contract duration
- How long you want to buy your energy from the generator
- Termination
- Under what conditions can you cancel the contract
The electricity from a PPA is still delivered to you in the same way as it always has been, across the electricity grid. There’s no need to worry about how it will get to you as this will all be arranged behind the scenes by a business like Voltclub. We work with suppliers, network operators and regulators to ensure that the PPA is excecuted on your behalf exactly how you want it to be.
If you’re interested in finding out more about how you could get your own PPA, get in touch with our team: info@voltclub.ie
How much does a PPA cost?
By going direct to the generator you cut out a lot of the middlemen in the energy industry. This mean that entering a PPA with a renewable energy generator can be smart way to reduce your energy costs and increase the transparency of your energy supply chain at the same time.
When you buy electricity from a regular supplier the price you pay is made up of a few different parts, some of which are fixed by the Government each year. These costs are the same for everyone regardless of who you buy your energy from. The actual cost of making electricity is much less than you might think, in a typical bill the costs will broken down as follows:
- Energy generation ~ 40%
- Network costs ~ 45%
- Taxes and Charges ~ 15%
A PPA will only impact on the energy generation portion of your bill.
Fixing a significant part of your energy bill is a great advantage of a PPA. A number of large companies have been taking full advantage of this in recent years. Google now buys a significant portion of their energy directly from wind and solar farms across the world, globally they now buy enough renewable energy each year to power Ireland.
The reason Google, Amazon and other forward thinking businesses have bought their energy directly from generators is because it reduces their carbon footprint, their energy bills and makes perfect business sense.
If you want to find out how to join many other businesses and get your own PPA why not get in touch with our team: info@voltclub.ie