Latest news with #VPPAs
Time of India
17-06-2025
- Business
- Time of India
India proposes virtual power agreements to boost renewable energy trading in power markets
India's power market regulator on Tuesday proposed amending its electricity trading rules to introduce Virtual Power Purchase Agreement (VPPA), a new financial instrument aimed at helping consumers meet renewable energy obligations and trade power. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads India's power market regulator on Tuesday proposed amending its electricity trading rules to introduce Virtual Power Purchase Agreement (VPPA), a new financial instrument aimed at helping consumers meet renewable energy obligations and trade 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 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 difference between the agreed VPPA price and the actual market price is settled financially between the two 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 early this exchanges, National Stock Exchange and Multi Commodity Exchange of India (MCX) last week announced that they will launch power derivative draft regulation also proposes to enhance CERC's powers to inspect and audit power exchanges and OTC has invited public comments on the draft until July 14 before finalizing the regulation.
Reuters
17-06-2025
- Business
- Reuters
India proposes virtual power agreements to boost renewable energy trading in power markets
June 17 (Reuters) - India's power market regulator on Tuesday proposed amending its electricity trading rules to introduce Virtual Power Purchase Agreement (VPPA), a new financial instrument aimed at helping consumers meet renewable energy obligations and trade power. 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 ( opens new tab and Multi Commodity Exchange of India (MCX) ( 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.
Hindustan Times
16-06-2025
- Business
- Hindustan Times
The virtual PPA voyage in India
On May 22, 2025, the Central Electricity Regulatory Commission (CERC) released draft guidelines to establish a regulatory framework for Virtual Power Purchase Agreements (VPPAs), marking another milestone on India's path to its 500 GW renewable energy (RE) target. VPPA is a form of a corporate power purchase agreement (CPPA). A VPPA or a CPPA is not defined under the Indian legislation yet. However, the same is already internationally recognised. VPPAs are essentially contracts for difference, allowing corporates to transact with project developers at a fixed price for a fixed duration. While the power is sold on the exchange, Renewable Energy Certificates (RECs) corresponding to the power sold are transferred to the corporate(s) and the differential is paid by the corporate upon transfer of RECs. The VPPA mechanism aims to enhance RE procurement by large commercial and industrial (C&I) consumers with substantial electricity demand. The VPPA model is operative in countries like Australia, UK and the US. In these liberalised electricity markets, VPPAs operate as commercial agreements with no requirement of special energy regulatory approval. Though in some jurisdictions VPPAs are subject to derivative accounting rules. India (until now) had not formally integrated VPPAs into its legal framework. Instead, corporate offtakers (C&I customers) met their RE goals through open-access or captive-supply arrangements, principally via three primary routes of RE consumption i.e. onsite solar, intra-state offsite solar and purchasing RECs. Since corporates generally seek low-risk, firm and competitively priced RE options, exercising these routes of consumption has often been constrained by state-level regulatory issues, surcharges, net-metering caps, wheeling policies etc. In India, while 70 to 80% of the corporates report procuring RE and many have joined the global RE100 initiative, their actual RE consumption still lags i.e. just 7 to 10% of total electricity use compared to 20% in case of companies from the US. CERC's new draft guidelines now provide the first formal recognition of a VPPA contract format. It is perceived that introduction of VPPAs will provide C&I consumers with a fourth option enabling inter-state procurement. Like how it operates internationally, draft guidelines provide that VPPA would allow a designated consumer to financially settle a contract with an RE generator without physically receiving power. The RE generator will sell electricity on exchanges and RECs generated from such sales will be transferred to the consumer for RCO compliance. The price realised on the exchange will then be settled with the consumer. Further, in the draft guidelines VPPAs are proposed to be Non-Transferable Specific Delivery (NTSD) Over-the-Counter (OTC) contracts between consumers and RE generators. Guidelines acknowledge SEBI's clarification that such OTC contracts do not fall under the Securities Contracts (Regulation) Act, placing them within CERC's jurisdiction. This resolves the earlier concerns among corporates (C&I customers) that VPPAs might be treated as derivative instruments, potentially subjecting them to additional regulatory burdens. Though the guidelines come as a first step for formal recognition of VPPAs, they do not yet outline the full regulatory mechanism. The guidelines specify that VPPA disputes will follow the terms of the contract, however, the questions remain as to how VPPAs will be monitored and whether ultimately CERC or any other adjudicatory body will have the jurisdiction. The guidelines also offer limited information on disclosure obligations, risk management protocols etc. This is relevant since the contract would be executed through OTC platforms and the underlying power would be traded on the exchange. It will be important for these gaps to be addressed in follow on regulations or implementation rules. Although the guidelines offer a route for C&I consumers to meet RCO and sustainability goals by avoiding geographic and regulatory barriers, maintaining price competitiveness may be a concern. Much of India's electricity generation is tied up in long-term contracts and the exchange market is largely driven by thermal power. To remain financially viable and cash neutral VPPA tariffs may have to match or beat prevailing break-even rates. In addition to benefitting C&I customers, VPPAs may also aid RE generators by diversifying their customer base. Currently RE developers primarily engage with RPO-bound entities through long-term PPAs. VPPAs on the hand would introduce medium-term contractual opportunities, offering a more flexible and market-aligned price structure. This article is authored by Poonam Verma Sengupta, partner, JSA Advocates and Solicitors.
Time of India
04-06-2025
- Business
- Time of India
CERC pushes virtual PPAs to help industries meet renewable targets without transmission hurdles
New Delhi: The Central Electricity Regulatory Commission ( CERC ) has floated draft guidelines for virtual power purchase agreements (VPPAs), proposing a regulatory framework to enable enterprises and Designated Consumers to meet their long-term Renewable Energy Consumption Obligations (RCO) under the Energy Conservation Act, 2001. The draft defines VPPAs as non-transferable specific delivery (NTSD) over-the-counter (OTC) financial contracts between a consumer and a renewable energy (RE) generator. The draft defines VPPAs as non-transferable specific delivery (NTSD) over-the-counter (OTC) financial contracts between a consumer and a renewable energy (RE) generator. Under the structure, consumers pay a fixed pre-agreed VPPA price while the RE generator sells power on the exchange. The difference between the VPPA price and the realised market price is settled bilaterally between the two parties, without physical delivery of electricity. The Ministry of Power, through a communication dated March 3, 2025, directed CERC to develop a regulatory mechanism for such contracts to facilitate RCO compliance. In support, the Securities and Exchange Board of India (SEBI), in a letter dated January 31, 2025, clarified that VPPAs are non-tradable OTC contracts and thus do not fall under the purview of the Securities Contracts Regulation Act, 1956. The guidelines provide that RE generators entering VPPAs must register under the REC Regulations, 2022. Renewable Energy Certificates (RECs) generated through such contracts must be transferred to the consumer and extinguished as per REC Registry procedures. These RECs cannot be traded. "The RE generator shall sell electricity through power exchange or any other mode authorised under the Electricity Act 2003, and the difference between the VPPA price and the market price shall be settled bilaterally between the contracting parties as per mutually agreed terms," the draft states. Consumers may execute VPPAs directly, through registered traders, or via OTC platforms recognised by CERC. Disputes related to these contracts will be resolved in accordance with the agreed terms in the bilateral agreement. The Commission has sought stakeholder feedback on the proposed guidelines before finalising the framework. The move is expected to support India's target of achieving 500 GW of installed capacity from non-fossil sources by 2030.
Associated Press
16-04-2025
- Automotive
- Associated Press
Seven Honda Auto Plants in America Earn EPA ENERGY STAR Award for Energy Efficiency
MARYSVILLE, Ohio, April 16, 2025 /PRNewswire/ -- All Honda U.S. auto plant locations have earned the 2024 U.S. Environmental Protection Agency (EPA) ENERGY STAR Certificate for Outstanding Energy Efficiency, demonstrating the commitment by Honda to reduce energy consumption and greenhouse gas emissions. These sustainable manufacturing efforts contribute toward the company's global goal to achieve carbon neutrality for all products and corporate activities by 2050. Honda has been a leader in ENERGY STAR certification since the EPA began awarding the distinction to industrial plants in 2006. Honda U.S. mass production1 plants, including those building vehicles and power units, earning ENERGY STAR certification for 2024 include: Moreover, in 2024 Honda of Canada Mfg. also earned its fifth awards for its auto and engine plants.2 Honda is working toward its global goal of zero environmental impact by 2050 through its 'Triple Action to Zero' approach. It includes achieving carbon neutrality for all products and corporate activities, 100% utilization of renewable energy, and resource circulation, using 100% sustainable materials by reprocessing products back to raw materials and reusing those materials in the creation of new products. Through the company's Green Factory initiatives, Honda is working comprehensively to address the environmental impacts of product manufacturing, including water and energy use, waste and emissions. Honda already introduced energy-saving initiatives, shifting to low-carbon energy sources, and offsetting more than 60% of the electricity used in its North American manufacturing operations through long-term virtual power purchase agreements (VPPAs) for renewable wind and solar power. 'Our global goal to achieve carbon neutrality for all products and corporate activities by 2050 has led Honda to undertake a number of environmental initiatives at our manufacturing plants in North America,' said Jeff Waid, who leads Honda's Green Factory efforts for manufacturing in North America. 'Energy efficiency initiatives and sustainable business practices focused on waste and water reduction are central to our environmentally responsible practices, and we are honored to earn the U.S. EPA ENERGY STAR certificate.' ENERGY STAR certification is awarded to plants in the top 25th percentile of all plants in the nation with regard to energy performance. The award is based on energy used per unit produced. ENERGY STAR was introduced by the EPA in 1992 as a voluntary, market-based partnership to reduce greenhouse gas emissions through energy efficiency. To date, tens of thousands of buildings and plants across all 50 states have earned the ENERGY STAR. For more information about ENERGY STAR Certification for industrial facilities, please visit About the Honda Commitment to the Environment Honda is transforming its operations to realize its global goal of zero environmental impact by 2050. Through its 'Triple Action to Zero' approach, Honda aims to achieve carbon neutrality for all products and corporate activities; utilize 100% carbon-free energy; and pursue resource circulation, the use of 100% sustainable materials by reprocessing products back to raw materials and reusing those materials in the creation of new products. Toward this goal, Honda will strive to make battery-electric and fuel cell-electric vehicles represent 100% of auto sales globally by 2040, while beginning electrification of our power sports and power equipment product lineups. To reduce the environmental impact of its business operations, Honda is offsetting CO2 emissions from its North American manufacturing operations through long-term virtual power purchase agreements (VPPAs) for carbon-free wind and solar power that seek to cover more than 60% of the electricity Honda uses in North America. Honda also supports its suppliers and independent dealerships across North America to incorporate environmentally responsible business practices through the Honda Green Excellence Program and Honda Environmental Leadership Program, respectively. Learn more at 1Honda products are built using domestic and globally sourced parts. 2The U.S. EPA began offering ENERGY STAR Certification of manufacturing plants in Canada in 2018, working with Natural Resources, Canada. View original content to download multimedia: SOURCE American Honda Motor Co., Inc.
