Easy VPPAs: How simpler contracts are making PPAs more accessible

Entering a PPA is a complex undertaking. Lengthy negotiations and detailed risk assessments can deter many companies from pursuing such agreements. Others simply lack the scale or financial capacity to even consider a PPA. The question, then, is how to make these contracts more accessible.

LevelTen Energy recently launched two initiatives — LevelTen Energy’s Accelerated Process (LEAP^TM) and Easy VPPAs — designed to streamline the PPA process, making it easier to participate and opening the PPA market to a wider range of companies.

Taking a LEAP^TM: What is LevelTen Energy’s Accelerated Process?

In simple terms, LEAP^TM is a fast PPA procurement process that makes contract terms transparent to potential sellers from the outset, while leaving room to tailor key aspects and manage risk. It is designed for experienced electricity buyers who are familiar with the PPA market, have a considerable consumption load, and know exactly what they are looking for in a renewable energy project.

“LEAP^TM reduces procurement timelines, creating a checklist of all the terms and conditions that sellers should accept,” says Greg Kolodziej, Director of Global Strategic Partner Programmes at LevelTen Energy. “About 80% of the contract is defined upfront, which creates a reverse auction scenario.”

Once interested sellers read the LEAP^TM agreement, they can either opt out or proceed, focusing negotiations on pricing and other details, which accelerates the process considerably. While traditional RFP processes can take over a year from start to signature, LEAP^TM transactions close in about two months.

Efficiency also cuts costs. “LEAP^TM contracts will typically lead to lower prices because the process is significantly faster, with less need for drawn-out legal involvement,” Kolodziej explains. “Additionally, LEAP^TM often brings larger aggregated volumes to market, which drives competitive pricing.”

Although LEAP^TM contracts are not for every off-taker, they can open the door to other arrangements that extend the benefits of faster contracts to smaller energy buyers.

What is an Easy VPPA, and who is it for?

Easy VPPAs (Virtual Power Purchase Agreements) are a wholesale/retail aggregation solution designed to simplify the contracting process for small and mid-sized organisations. They are anchored by a third-party intermediary with robust buying power — such as an experienced electricity provider — who enters into a PPA and then extends shorter, simplified contracts to a cluster of smaller off-takers.

Easy VPPAs work like this:

1) A group of potential clients — assisted by Ecohz — shows interest in a VPPA.

2) The anchoring party runs an RFP process using the LEAP^TM model to establish a PPA with a suitable seller.

3) The clients still in the aggregation negotiate and sign a short-form contract directly with the anchoring party, which manages all post-COD aspects with the seller, including Energy Attribute Certificates (EACs), project monitoring, metering, performance, and any downstream issues.

4) Once all the clients in the aggregation have signed their short-form agreements, the anchoring party executes the PPA at the aggregated volume.

Companies with relatively small consumption — under 120 GWh per year — that would traditionally be overlooked by sellers can now enter into contracts that are simpler than classic PPAs. They also benefit from the same terms and conditions that the anchoring party negotiates for itself through LEAP^TM contracts, while gaining a larger partner that can move quickly to secure the best projects.

Currently available in the United States, Easy VPPAs are gaining momentum due to legislative changes that have increased the urgency for companies to secure contracts before the removal of subsidies for renewable energy projects significantly affects pricing.

The model will soon be introduced in Europe, and is expected to be paired with energy storage solutions to help mitigate the impact of increasingly frequent negative electricity prices.

Easy VPPAs for Scope 3 decarbonisation

The aggregation programme could also enable companies to tackle Scope 3 emissions by offering Easy VPPAs to a group of suppliers.

“Organisations in supply chains may not be able to pursue renewable energy procurement programmes by themselves,” Kolodziej adds. “But by supporting value chain partners in securing renewable electricity (Scope 2), companies can simultaneously make measurable progress on their own Scope 3 emissions.”

How can Ecohz help?

Ecohz helps smaller-load energy buyers unlock the benefits of Easy VPPAs. Our advisors work with you to assess your renewable procurement strategy and connect you to an aggregation pool that fits your needs.

Whether your goal is to strengthen your energy strategy, accelerate progress towards emissions targets, or hedge against market volatility, we help you secure the most advantageous deal for your organisation.

At Ecohz, we draw on extensive experience in simplifying renewable energy solutions. We guide you through every step of the process to ensure you maximise the benefits of reducing emissions.