CERC proposes first amendment to power market regulations, 2025

The Central Electricity Regulatory Commission (CERC) has issued a draft of the first amendment to the Power Market Regulations, 2021. Dated 17 June 2025, the draft aims to reflect evolving market trends, including the rise of virtual contracts and the growing role of designated consumers under energy conservation laws.

The amendment introduces and defines new concepts such as the Virtual Power Purchase Agreements (VPPA) and “VPPA price”. A VPPA refers to a non-transferable, specific delivery Over-the-Counter (OTC) contract between a renewable energy generator and a consumer or designated consumer. Under a VPPA, the generator sells electricity via the Power Exchange or other approved modes, while the price difference between the VPPA and the market is settled directly between the two parties.

OTC platforms are also getting clearer treatment. The updated regulations specify that OTC platforms will enable the execution of contracts without taking on counterparty or credit risks. They will facilitate multiple contract types, including energy contracts, capacity contracts, renewable energy certificates, banking of power, battery energy storage system (BESS) contracts, and VPPAs.

To operate an OTC platform, the applicant must now have a minimum net worth of Rs 35 crore. This requirement applies both at the time of application and on an ongoing basis. Existing OTC platforms have twelve months to comply, supported by an audited special balance sheet.

The draft also aligns references in the regulations to the latest “Connectivity and General Network Access (GNA)” framework, replacing older mentions of “Open Access Regulations”. It updates contract definitions and market structure elements, reflecting the changes brought by the Connectivity and GNA Regulations issued in 2022.

The registration period for OTC platforms is now ten years. Previously registered platforms will also be deemed to have a ten-year term from their registration date. The Commission has also retained its powers to inspect, audit, or cancel the registration of any platform or member, ensuring continued regulatory oversight.

With this amendment, CERC seeks to formalise emerging instruments like VPPAs while strengthening operational and financial accountability in the OTC market space.