In one line
Financial contract where a buyer pays a fixed price for renewable energy without physical electricity delivery, settled against market prices.
What it means
A Virtual Power Purchase Agreement (VPPA) is a contract-for-difference between a renewable generator and an offtaker. The buyer pays a fixed price (the strike price); the generator sells output to the wholesale market; the difference is settled financially. No physical electricity flows between them. VPPAs are the dominant corporate procurement structure in the US and growing in EU, used by hyperscalers (Meta, Google, Amazon) buying renewable energy across multi-site portfolios.
Related terms
Browse every term in the renewable energy glossary, or read the latest analysis on Markets.