The Energy Regulatory Commission (ERC) is continuing with its ERC sandbox by promoting a new pilot renewable power trade project between Gulf Energy Development Plc and Pandora, a Danish jewellery company.
The project focuses on a "virtual power purchase agreement", also known as a VPPA, with Gulf and Pandora jointly pioneering the VPPA.
The two companies recently signed a memorandum of understanding (MoU) for a one-year project to study, develop and implement this renewable power trade.
Unlike ordinary power purchase agreements, a VPPA has nothing to do with the actual purchase of electricity as the agreement is only a financial contract between a power company and the buyer, according to the ERC.
Under the MoU, Gulf, through its subsidiary Gulf 1, will sell renewable electricity from its rooftop solar panels to Pandora at a price jointly agreed upon by the two companies.
If the price is higher than the wholesale market price, Pandora will be compensated for the difference.
This enables Gulf 1 to ensure a more stable return on investment and support the development of new renewable energy projects while Pandora is entitled to acquire renewable energy certificates (RECs) from the project to offset their carbon footprint.
An REC is an incentive aimed at encouraging owners of power plants to produce electricity from clean fuels. Each REC, which certifies that the bearer generates one megawatt-hour from renewable energy resources, can be traded as an energy commodity.
"We recognise the importance of climate action and decarbonisation and this is in line with a target to increase the proportion of renewables power supply from the current 10% to over 40% by 2035," said Yupapin Wangviwat, deputy chief executive and chief financing officer of Gulf Energy Development.
The ERC sandbox was launched in 2019, with the first phase focusing on testing the micro grid system and prosumer concept.
