Structuring Virtual Power Purchase Agreements: Limiting Transaction Risks, Regulatory Considerations

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, September 6, 2018

Recorded event now available

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Program Materials

This CLE webinar will discuss structuring virtual or financial power purchase agreements (PPAs) for large corporations. The panel will provide guidance on the different factors to consider when structuring virtual PPA transactions, how they compare to physical PPAs, benefits for purchasers, available risk mitigation strategies, and an overview of the shifting regulatory environment impacting these transactions.

Description

PPAs, a mainstay of the renewable energy landscape, are essentially contracts for the sale of electricity and the associated renewable energy certificates (RECs) to a corporate or industrial buyer by a developer or project owner. For corporate entities, PPAs can be powerful tools in providing a long-term hedge against volatile energy prices and achieving sustainability goals.

Unlike physical PPAs, where the buyer (or “off-taker”) takes legal title and delivery of the energy and RECs, virtual PPAs are arrangements that allow the buyer/off-taker to purchase the power output at a fixed price and retain the RECs without taking actual delivery of the power. The seller typically liquidates the energy at market-level pricing to a third party and transfers any net revenue generated to the off-taker.

While PPA transactions are increasingly common in the marketplace and virtual PPAs may eschew some of the risks associated with retaining title to purchased energy, there remain significant regulatory and risk factors to address to realize the financial, environmental and transactional benefits of these deal structures.

Listen as our panel of expert practitioners offers best practices for structuring virtual PPAs, critical terms for inclusion, and the best means of mitigating the risks inherent to these transactions.

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Outline

  1. Understanding virtual PPAs
    1. Overview of PPAs generally
    2. Comparison to physical PPAs
    3. A typical transaction cycle
  2. Regulatory considerations
    1. Federal Energy Regulatory Commission
    2. Securities and Exchange Commission
    3. Dodd-Frank Wall Street Reform and Consumer Protection Act
    4. Department of Treasury guidance

Benefits

The panel will review these and other relevant issues:

  • What regulatory hurdles exist to successfully closing a virtual PPA transaction?
  • What are some of the benefits of a virtual PPA compared to a physical PPA for corporations?
  • How can corporate off-takers best mitigate risk in virtual PPAs?
  • How are risks evaluated and mitigated?

Faculty

Lowder, Darin
Darin Lowder

Partner
Ballard Spahr

Mr. Lowder focuses on energy, project finance, and related tax and public financing tools. He has worked with...  |  Read More

Lowther, Frederick
Frederick M. Lowther

Partner
Blank Rome

Mr. Lowther devotes his career primarily to the development of large energy and natural resource projects in the U.S....  |  Read More

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