Virtual Power Purchase Agreement (VPPA)

A financial agreement in which a customer agrees to pay a predetermined price for the generated electricity and, typically, the renewable attributes (RECs) from a renewable energy project. Instead of the customer receiving the electricity physically, the project owner sells the energy into the local organized wholesale market; for each MWh, the buyer then pays or receives the difference between the wholesale market revenue and the predetermined PPA price.

Also known as: Contract for Differences, Synthetic PPA, Financial PPA