A financial AAE can be used as a hedge against the volatility of electricity prices for the customer if the price of electricity sold by the financial PPP project in the wholesale electricity market is correlated with the price paid by the customer to purchase electricity for its own activities. If electricity prices are high in both markets, the customer is credited by the seller with a high interest rate and can offset the high costs he pays for electricity through his credit. Conversely, when electricity prices are low, the customer`s electricity costs are also low, but this is offset by the burden the customer owes to the seller. The net result of the purchase organization is a less volatile cost of electricity. Microsoft has signed three VFAs with Der Allianz and Nephila to cover its PPAs for wind projects in Illinois, Kansas and Texas, which account for about 500 million MW of its portfolio, or nearly half of the renewable energy under contract. “As Microsoft continues to purchase renewable energy to power our business, we believe we are using VFAs to consolidate energy and cover our consumption every hour,” Janous wrote. “Last year, business sales contracts gained momentum due to lower prices for renewable energy generation, the phasing out of EEG subsidies and the growing demand for green energy from businesses,” says Hanno Mieth. “From our point of view, this trend will continue. As one of the leading players in the market with long experience, we have both technical know-how and a wide range of renewable production opportunities, and we are able to offer it to both industrial customers and developers. It would be difficult to overestimate the impact of companies` acquisition of renewable energy, particularly through electricity purchase contracts (PPPs), on the entire renewable energy market. In less than a decade, in the United States alone, the renewable energy generated by PPPs has grown from zero to more than 13 gigawatts. Microsoft is one of the largest players in this market, starting with a 110-megawatt wind project in Texas in 2013 to a portfolio of more than 1.2 gigawatts in six states and three continents.

“The fuel for renewable energy is time, wind blowing and the sun is shining,” said Taylor of REsurety. “This fuel is free, but it is unpredictable and volatile and traditional electricity markets players are poorly equipped and do not want to manage this risk because it cannot be traded as a natural gas price risk or a coal price risk.” According to Davies, negotiable fossil fuel blocks have always been used in wholesale markets.

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