Virtual Power Purchase Agreements

And how they complement your net zero strategy

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What Is A Virtual Power Purchase Agreement

A Virtual Power Purchase Agreement is a long-term financial agreement linked to the output of a renewable energy project. Rather than physically receiving electricity from that project, the organisation agrees a fixed price for its output over a defined period.

The electricity is sold into the grid, and the difference between the market price and the agreed price is settled financially between the parties.

This structure allows organisations to secure long-term price visibility, support the development of new renewable assets, and demonstrate measurable progress towards sustainability commitments.

How it works

If On-Site Solar Isn’t Possible Renewable Energy Still Is

For many organisations, installing solar on their own sites is the most direct route to reducing energy costs and carbon emissions. But in reality, not every site is suitable. Grid constraints, lease lengths, roof limitations, or operational risk can all make on-site generation impractical.

Types Of Funding

That does not mean renewable energy is off the table.

Virtual Power Purchase Agreements (VPPAs) offer a credible alternative, allowing organisations to support new renewable generation while managing long-term price exposure and sustainability targets.

Businesses increasingly recognise that energy strategy cannot rely on a single solution. While on-site solar often delivers the strongest cost benefit, some organisations face structural barriers that limit what can be installed locally.

These barriers might include grid connection delays, planning constraints, limited physical space, or short property leases. In other cases, energy demand simply exceeds what can be generated on site.

Virtual PPAs provide a route to renewable energy that sits alongside on-site solutions rather than replacing them. They allow organisations to diversify their approach while still contributing to new renewable capacity.

Working With Shawton Energy On A VPPA

Delivering a VPPA requires alignment between financial, operational, and sustainability objectives. Shawton Energy supports organisations through this process from the outset.

Our Approach

We begin by understanding energy usage, cost exposure, and long-term targets. From there, we help identify whether a VPPA is appropriate, what structure would be most suitable, and how it fits alongside other renewable options.

Our role includes guiding commercial discussions, coordinating project partners, and ensuring the agreement supports both financial outcomes and sustainability reporting requirements.

How we deliver

Understand

Analyse energy usage and long-term targets.

Assess

Evaluate VPPA suitability and options.

Structure

Develop the VPPA framework and structure.

Deliver

Finalise and implement VPPA agreement.

How A VPPA Can Support Your Net Zero Strategy

Supports Net Zero

Additionality/new renewable projects

Improves Reporting

Scope 2 emissions alignment

Manages Risk

Protection from Market Volatility

Complements On-Site Energy

Works with Solar across multiple sites

Find out how a Solar Power Purchase Agreement works when you partner with Shawton Energy

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Virtual Power Purchase Agreement FAQs

Why would a business choose a VPPA instead of on-site solar?

While on-site solar often delivers the strongest direct cost savings, it is not always viable for every organisation. Factors such as limited roof space, planning restrictions, short lease agreements, operational risk, or grid constraints can prevent on-site generation. A VPPA allows businesses to still access renewable energy benefits and support new renewable infrastructure without installing generation assets at their own facilities.

Does a VPPA replace the need for on-site renewable energy?

No. In many cases, a VPPA works alongside on-site solar rather than replacing it. Businesses with multiple locations or high energy demand often use a blended strategy, combining on-site generation where possible with off-site renewable procurement through a VPPA to strengthen their wider Net Zero strategy.

How does a VPPA help manage energy price volatility?

A VPPA is typically structured around a long-term fixed electricity price. This provides greater pricing visibility and can help protect businesses from fluctuations in wholesale energy markets. For organisations with significant electricity consumption, this can form part of a broader energy risk management strategy.

What are REGOs and how do they relate to a VPPA?

Renewable Energy Guarantees of Origin (REGOs) are certificates that verify electricity has been generated from renewable sources. In a VPPA structure, REGOs can be transferred alongside the agreement to support sustainability reporting and demonstrate renewable electricity procurement as part of Scope 2 emissions reporting.

Can a VPPA contribute to corporate sustainability reporting?

Yes. VPPAs are increasingly used by organisations looking to demonstrate measurable environmental progress and support Scope 2 emissions reduction targets. They can also help businesses show additionality by supporting the development of new renewable energy projects rather than simply purchasing existing green tariffs.

Is a VPPA only suitable for very large corporations?

While VPPAs are commonly associated with large energy-intensive organisations, they can also be structured for medium-sized businesses with clear sustainability objectives and long-term energy requirements. Suitability depends on energy usage, risk appetite, contract structure, and overall energy strategy.

Bringing Together Cost Certainty And Carbon Reduction

Virtual PPAs are not the right solution for every organisation. But where on-site generation is limited or where long-term energy certainty is a priority, they can provide a practical route to renewable energy adoption.

For organisations looking to build a credible, balanced Net Zero strategy, they offer a way to combine financial stability with measurable
environmental progress.

If you would like to explore whether a Virtual PPA could support your energy strategy, Shawton Energy would be happy to begin that conversation.

Contact us at;

hello@shawtonenergy.co.uk

+44 (0) 1925 794874

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