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CERC Proposes Key Reforms to Broaden Scope of OTC Power Markets, Recognize VPPAs

The Central Electricity Regulatory Commission (CERC) has proposed amendments to the Power Market Regulations, 2021, to significantly broaden the scope of over-the-counter (OTC) power markets in India. The revised framework includes delivery-based energy and capacity contracts, renewable energy certificates (RECs), power banking, battery energy storage system (BESS) contracts, and virtual power purchase agreements (VPPAs), enhancing market flexibility and transparency.

VPPAs, now formally included under the OTC framework, are non-transferable financial contracts where a consumer pays a fixed strike price to a renewable energy generator. The generator sells power on exchanges or other markets, and any difference between the VPPA price and market price is bilaterally settled. This mechanism supports consumers in meeting renewable energy obligations without physically taking power.

CERC has raised the minimum net worth requirement for OTC market applicants from Rs1 crore to Rs35 crore, applicable within 30 days of registration. Platform operators must maintain Rs3.5 crore net worth at all times, with a 12-month compliance window.

OTC platforms will facilitate direct transactions without assuming counterparty or credit risk, with 10-year registration validity. These developments, including CERC’s May 2025 VPPA guidelines, aim to strengthen decentralized energy trade and boost investor and consumer confidence in India’s evolving clean energy market.