A bilateral power purchase agreement (BPPA) is a contract between two parties, where one party purchases electricity from the other at a mutually agreed price. In the context of renewable energy, BPPAs are an increasingly popular way for corporations to procure renewable energy from independent power producers (IPPs).
Under a BPPA, a corporation typically agrees to purchase a fixed amount of renewable energy from an IPP over a set period of time. The agreement provides the IPP with a guaranteed revenue stream, which in turn could help to finance the construction of new renewable energy projects. For the corporation, the agreement provides a stable and predictable source of renewable energy, often at a lower cost than traditional electricity rates.
BPPAs are becoming increasingly popular as corporations strive to meet sustainability goals and reduce their carbon footprint. Many corporations have committed to sourcing 100% of their electricity from renewable sources in the coming years. However, traditional methods of procuring renewable energy, such as installing on-site solar arrays or purchasing Renewable Energy Credits (RECs), may not be feasible or cost-effective for all companies. BPPAs offer a more flexible and scalable solution for corporations of all sizes.
In addition to the direct benefits of procuring renewable energy, BPPAs can also have indirect benefits for corporations. For example, by signing a BPPA, corporations can demonstrate their commitment to sustainability and gain a competitive edge in their industry. BPPAs can also provide corporations with protection against future price volatility in the energy market, as the price in the contract is typically fixed for the duration of the agreement.
Overall, bilateral power purchase agreements are an innovative solution for corporations looking to procure renewable energy. By partnering with independent power producers, corporations can meet sustainability goals while also enjoying the benefits of stable and predictable energy prices. As renewable energy continues to grow in popularity, BPPAs are sure to become an increasingly important part of the corporate energy landscape.