As a large organization, a Power Purchase Agreement (PPA) is often the most accessible and effective way for an organization to procure large amounts of renewable energy. The two most common types of PPA are sleeved PPAs, also called a direct PPA or retail PPA, and Virtual Power Purchase Agreements (VPPAs).
What is a Sleeved PPA?
In a sleeved PPA, an intermediary utility company handles the transfer of money and energy to and from a renewable energy (RE) project on behalf of the buyer.
The utility takes the energy directly from the RE project and “sleeves” it to the buyer at its point of intake, for a fee. If the purchased renewable energy isn’t enough to meet the buyer’s energy needs, the utility is also responsible for supplying the additional power required.
A Sleeved (Direct) Vs. Virtual PPA
If you’ve weighed the risks of a VPPA for your renewables purchase and are uncomfortable with the level of risk, a sleeved PPA may be a good option to explore. Unlike a VPPA, in a sleeved PPA:
- The buyer does not need to be intimately familiar with wholesale power market dynamics; and
- The buyer is not subject to wholesale power market price fluctuations because the utility bears the market risk
How Sleeved PPA’s Work
A sleeved PPA — also referred to as a Direct PPA or Retail PPA — is a great tool for purchasing renewable energy to meet corporate sustainability goals. Sleeved PPAs are advantageous for organizations with large, fragmented loads or limited onsite opportunities. By sleeving your PPA with a utility supplier, you gain key benefits while reducing your organization’s exposure to market risks. For large energy users without available roof space or viable land nearby, we can provide solar energy.
If your company is looking for a risk-averse solution to meeting its sustainability goals, a direct PPA is worth exploring. Learn more about how you can meet your energy needs while simultaneously reducing your collective carbon footprint. Contact Olympus Power today.