India proposes virtual power agreements to boost renewable energy trading in power markets
The Central Electricity Regulatory Commission's (CERC) draft proposal formally recognizes VPPAs as over-the-counter (OTC) contracts that will help large industrial buyers meet clean energy targets without taking physical delivery.
Under the draft Power Market Regulations, 2025, a VPPA allows a consumer to agree on a fixed price with a renewable energy generator, who then sells the electricity in the open market.
The difference between the agreed VPPA price and the actual market price is settled financially between the two parties.
While the VPPAs offer an innovative pathway for large consumers to meet their renewable consumption obligations, they risk becoming a mere compliance mechanism, enabling consumers to claim 100% renewable usage, Ember analysts said, opens new tab early this month.
Indian exchanges, National Stock Exchange (NSEI.NS), opens new tab and Multi Commodity Exchange of India (MCX) (MCEI.NS), opens new tab last week announced that they will launch power derivative contracts.
The draft regulation also proposes to enhance CERC's powers to inspect and audit power exchanges and OTC platforms.
CERC has invited public comments on the draft until July 14 before finalizing the regulation.
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