The World Business Council for Sustainable Development (WBCSD) is leading the way in innovation when it comes to power purchase agreement (PPA) structures. The council`s approach to PPA`s is focused on ensuring a sustainable future by creating a framework that promotes renewable energy sources.
The traditional PPA structure has been in place for many years, and it is typically a long-term agreement between the purchaser and supplier of electricity, typically for a period of 15-20 years. Under this structure, the purchaser agrees to buy an agreed-upon amount of electricity from the supplier at a fixed price. The supplier, in turn, agrees to generate or procure the electricity from a specific source.
However, this structure has a few limitations when it comes to promoting renewable energy sources. The supplier, under a traditional PPA, is under no obligation to procure electricity from renewable sources, even if the purchaser prefers it. This means that the purchaser can be inadvertently supporting non-renewable energy sources without realizing it.
The WBCSD`s approach to PPA`s is to promote renewable energy sources by creating a framework that prioritizes them. The council has created different types of PPA structures, such as `virtual` and `physical` PPAs, that encourage the procurement of renewable energy sources.
Virtual PPAs, for example, allow the purchaser to purchase renewable energy directly from a supplier, even if it is not geographically located nearby. This is possible through the use of renewable energy certificates (RECs), which represent the environmental attributes of renewable energy sources. The purchaser can then claim that they are consuming renewable energy, and the supplier can use the revenue from the sale of RECs to fund the development of additional renewable energy projects.
Physical PPAs, on the other hand, involve the delivery of renewable energy directly to the purchaser`s premises. This is typically achieved through the construction of renewable energy projects in close proximity to the purchaser`s premises.
The WBCSD`s innovative approach to PPA structures is important because it allows purchasers to make more informed decisions when it comes to supporting renewable energy sources. By creating a framework that prioritizes renewable energy sources, the council is helping to promote sustainable energy consumption, which will ultimately benefit our planet.
In conclusion, the WBCSD`s innovation in PPA structures is a step in the right direction when it comes to promoting renewable energy consumption. By prioritizing renewable energy sources, the council is helping to create a more sustainable future, and we should all take note and follow their lead.