Operation of a 75MW solar farm backed by Electrify America begins

A new 75 megawatt solar farm has begun operations in Southern California, according to Electrify America, the EV charging business founded by Volkswagen.

This solar farm is not managed by Electrify America. Instead, the corporation signed a 15-year virtual power purchase agreement (VPPA) with renewable energy provider Terra-Gen. It's the latest move in Electrify America's efforts to connect with renewable energy plants. The construction of the plant began in February.

A typical VPPA involves a buyer who pays a fixed amount for whatever energy is created and a seller who creates the energy and sells it to the buyer at market prices via the grid. The buyer assumes considerable risk because the seller may end up selling the energy at a lower price than the fixed rate. However, if market prices rise above the set rate, the buyer may benefit.

In other words, Electrify America is taking a risk by entering into this agreement, but in return, it will be able to claim that it is assisting in grid cleaning and may even profit from rising energy prices.

Renewable energy developers are critical to grid decarbonization, but how far do VPPAs go in reducing climate change? This appears to be a hypothetical situation. Even Electrify America’s press release leaves some wiggle room on this front: the company said in a statement that this brand new construction contributes to ‘additionality,’ by producing new renewable energy that may not otherwise be available (emphasis ours).