VPPA
What is VPPA?
- VPPA or Virtual Power Purchase Agreement is a form of financial contract between a consumer and a power producer to purchase and sell energy at a pre-agreed price. Under such mechanism a power producer can virtually sell energy to a consumer even though the consumer is not directly connected to the power plant.
- With VPPA, a power producer can sell power to the system under the NEDA framework without a normal PPA. A power producer can mitigate the risk of price volatility while its consumer can have the benefit of stable long term energy prices. The consumer will remain as a normal consumer of the utility company with secure and firm supply not affected by quality of supply of the power producer.
- Under VPPA for renewable energy, a power producer can also sell the Renewable Energy Certificate (REC) to a consumer if the consumer wishes to purchase such certificates. This will provide additional revenue to the power producer while the consumer can enhance its corporate image in using RE.
- This Virtual Power Purchase Agreement (VPPA) is called Corporate Green Power Agreement. In Malaysia, we implement this mechanism under the new programme called Corporate Green Power Programme (CGPP).