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CERC Set to Finalize Virtual PPA Guidelines, Unlocking 40 GW Renewable Projects

The Central Electricity Regulatory Commission (CERC) is preparing to release final guidelines for virtual power purchase agreements (VPPAs), a move expected to unlock financing for over 40 GW of stalled renewable energy projects across India. Dr. S.K. Chatterjee, Chief of Regulatory Affairs at CERC, confirmed at a FICCI webinar that the framework is in its final stage after wide stakeholder consultations on the draft issued in May.

Traditional power purchase agreements (PPAs) often face challenges like payment delays from distribution companies. VPPAs aim to address this by allowing corporate buyers to support renewable projects financially without taking physical delivery of electricity. Instead, electricity is sold into wholesale markets, while buyers receive renewable energy certificates (RECs) as proof of green power procurement. This helps companies meet ESG commitments and provides developers with revenue certainty.

To avoid classification as financial derivatives, VPPAs are being structured as non-transferable, specific delivery contracts in consultation with SEBI. Rajasthan has endorsed the model despite concerns over market volatility during peak solar hours. Industry experts note that globally, especially in the U.S., 80% of corporate renewable procurement already uses virtual agreements.

The guidelines will also clarify whether corporate buyers can transfer contracts to subsidiaries and standardize certificate accounting. With strong industry support, VPPAs are expected to play a crucial role in helping India achieve its 500 GW renewable energy target by 2030, while reducing dependence on traditional utility-scale PPAs.