Thursday, 18 October 2018
Microsoft announced this week that it has partnered with REsurety, along with their partners at Nephila Climate and Allianz Alternative Risk Transfer unit to developed a new sort of contract called a volume firming agreement (VFA).
In the blog post Microsoft's general manager of energy and sustainability Brian Janous highlights the usefulness of VFAs for PPA customers: "VFAs are intended to be a simple fix to a big challenge with renewable energy PPAs, namely that these deals expose the buyer to all the weather-related risks of power production, and the inherent intermittent nature of wind and solar means there are hourly issues to be addressed. Put simply, the power needs of buyers are static but the power from the project varies on a day-to-day, hour-to-hour basis." Simply put this means that VFAs will make PPAs feel more like traditional retail energy contracts for the buyer, by making a third party responsible for the risk of those fluctuations.