New Delhi: The Central Electricity Regulatory Commission (CERC) has proposed a comprehensive amendment to its existing power market regulations, introducing for the first time a legal framework for Virtual Power Purchase Agreements (VPPAs) into the regulatory lexicon. The draft, titled Power Market (First Amendment) Regulations, 2025, was published on June 17 and seeks to update the regulatory architecture for over-the-counter (OTC) electricity transactions in India.
One of the most significant changes proposed in the amendment is the formal introduction of VPPAs as a permissible OTC contract. A VPPA is defined as a non-transferable, specific delivery-based contract entered into between a consumer or a designated consumer and a renewable energy generator. Under this structure, the generator sells electricity through the power exchange or any other authorised mode, while the designated consumer guarantees payment of a pre-agreed VPPA price for the duration of the agreement. The differential between the VPPA price and the actual market price is settled bilaterally between the two parties.
The Commission has stated that the implementation and contractual terms of a VPPA will be governed by guidelines to be notified separately. Until then, the draft regulations establish the foundational definition and structure for such agreements, making them part of the regulatory landscape for the first time.
In addition to VPPAs, the CERC has also expanded the scope of OTC market contracts to include Battery Energy Storage System (BESS) contracts and other categories such as capacity contracts, banking of power, and renewable energy certificates. These changes are intended to enable greater flexibility and innovation in the way electricity is bought and sold outside traditional power exchanges.
The definition of the OTC platform has also been clarified. It is now described as an electronic platform that facilitates the exchange of information and transactions between buyers and sellers of electricity. These transactions may occur directly, through trading licensees, or on the platform itself, as per the guidelines issued by the Commission.
In a bid to ensure financial robustness, the CERC has proposed that all OTC platform operators must maintain a minimum net worth of ₹35 crore. Platforms that were registered prior to the implementation of these amended regulations will be given a 12-month period to meet this requirement and will be required to submit an audited special balance sheet as proof of compliance.
Additionally, the registration period for OTC platforms has been extended to 10 years from the date of registration. Those already registered will also be deemed to have a 10-year validity from the original date of registration.
The draft proposes that the price and other terms of contracts in the OTC market may now be decided through mutual agreement, through a trader, via a competitive bidding process, or as determined by the appropriate regulatory commission. It also states that scheduling applications for such contracts must follow the Connectivity and GNA Regulations and be in accordance with the Grid Code.
The draft regulations have been published for stakeholder consultation, in keeping with the CERC’s statutory obligations. Comments on the draft regulations can be sent to the CERC by July 14. Once the consultation period ends, the CERC will finalise the changes based on the feedback received. The amendments will come into effect from the date of publication in the Official Gazette.
