CERC releases draft guidelines for Virtual Power Purchase Agreements

The Central Electricity Regulatory Commission (CERC) has issued draft guidelines for Virtual Power Purchase Agreements (VPPAs). These agreements are designed to help large electricity consumers meet renewable energy targets without taking physical delivery of power.

VPPAs are a type of bilateral, non-tradable, non-transferable contract between a consumer or designated consumer and a renewable energy (RE) generator. The consumer pays a fixed VPPA price to the generator, who then sells power through exchanges or other authorised routes. The difference between this fixed price and the market price is settled directly between the parties.

This mechanism allows RE generators to monetise their production while enabling consumers to meet their RCO targets. The generated Renewable Energy Certificates (RECs) are transferred to the consumer for compliance, but cannot be traded further. CERC has clarified that these contracts will fall under its jurisdiction and not under the Securities Contracts Regulation Act (SCRA), based on the Securities and Exchange Board of India’s (SEBI) opinion.

The draft guidelines are issued under Regulation 54(3) of the Power Market Regulations (PMR) 2021. This regulation allows CERC to exercise its discretion on matters not explicitly covered under existing frameworks.

Key implementation steps include:

• VPPAs can be signed directly, via traders, or listed on CERC-registered Over The Counter (OTC) platforms.
  
  
• The RE project must be registered under CERC’s 2022 REC regulations.
  
  
• RECs transferred under VPPAs must be extinguished after acknowledgement by the REC Registry.
  
  
• Disputes arising from VPPAs will be resolved as per the contract terms between the parties.

Stakeholders have been invited to submit their comments on the draft by 20 June 2025 via email to CERC.