Cleantech Solar announced today that its maiden virtual power purchase agreement (VPPA) solar plant in India has started commercial operation. The project is amongst the first operational VPPA plants in India.
“Power from this operating solar power plant, after being dispossessed of its renewable attributes, is being sold to the energy exchange. The project has been registered under the International Renewable Energy Certificates (I-REC) mechanism, and the renewable attributes (in this case I-RECs) from this project are being purchased by a leading FMCG company under a virtual PPA,” stated Cleantech Solar.
The project is estimated to generate around 187 GWh of green power over its lifecycle, helping to offset over 171 kilotonnes of carbon emissions.
This virtual PPA agreement enables the client to support renewable energy development while reducing carbon emissions without directly integrating the solar project into their physical energy infrastructure. Functioning under the principle of ‘additionality’, virtual PPAs ensure the claimed environmental benefits or the green attributes by the procurer are credible as this energy would not have been generated without the said agreement. They work as a simple bilateral agreement between the IPP and the off-taker.
Aside from helping companies reduce their carbon footprints and meet sustainability targets, VPPAs provide a hedge against volatile electricity prices. A virtual power purchase agreement is a contract for differences (CFD), in which the parties agree on a fixed VPPA price. If the wholesale energy price is higher, the offtaker receives the difference. If the wholesale energy price is lower than the VPPA tariff agreed, the offtaker pays the solar project owner the difference. The VPPA does not involve the physical delivery of solar electricity to the offtaker’s facility and instead operates as a hedge against varying electricity prices.
Singapore-based Cleantech Solar is a pan-Asia supplier of renewable energy to corporates. It has numerous solar and wind projects across India and Southeast Asia, covering approximately 1 GWp of assets in operations, construction, and development stages. This includes installations in India, Singapore, Cambodia, Indonesia, Malaysia, Thailand, and Vietnam. The company is backed by long-term strategic shareholders including Keppel Corp., Keppel Asia Infrastructure Fund, and Shell Singapore.
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