Question 1

What is a virtual power purchase agreement?

Accepted Answer

A virtual power purchase agreement (VPPA) is a financial agreement between an organisation and a renewable energy generator. Instead of the electricity being delivered to you, the power is sold into the wholesale market, and the difference between a fixed strike price and the market price is settled between both parties. Fidelity Energy advises on structuring these agreements, assessing market exposure and managing the ongoing settlement.

Question 2

How do VPPAs work?

Accepted Answer

In a VPPA, your organisation agrees a fixed strike price with a renewable generator, and the generator sells its power into the wholesale market. When the market price is below the strike price you pay the difference, and when it is above, the generator pays you. This supports new renewable generation and helps manage long-term price exposure. Fidelity Energy manages the settlement for the life of the agreement.

Question 3

Is my company too small for a VPPA?

Accepted Answer

It depends, but VPPAs typically suit larger organisations with significant energy demand and defined sustainability targets, because the agreement is long term and exposed to wholesale market prices. Suitability also depends on your risk appetite, financial structure and ESG objectives. Fidelity Energy assesses each case individually and can advise whether a VPPA, or an alternative such as a REGO-backed green tariff, is the right fit.

Question 4

How long do VPPAs typically last?

Accepted Answer

VPPAs are long-term agreements, often lasting 10 to 20 years. That gives developers revenue certainty and gives your organisation long-term visibility over pricing and sustainability impact. If a 10-year agreement is too long for you, a REGO-backed green tariff can cover your Scope 2 reporting on a shorter contract. Fidelity Energy supports you for the life of the agreement.

Question 5

Do we still have to pay our regular utility bill?

Accepted Answer

Yes. A VPPA sits alongside your existing electricity supply contract and does not replace it, so you keep buying electricity from your supplier as normal. The VPPA is a separate financial agreement, settled on the difference between the agreed strike price and the wholesale market price. You support renewable generation without changing your physical supply, and Fidelity Energy manages the settlement alongside your supply contract.

Virtual Power Purchase Agreements (VPPAs)

Fix your power price and back new renewables

Agree a strike price

The power goes to the grid

The difference is settled

You claim the renewable power

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A VPPA works alongside your supply contract

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