India proposes virtual power purchase agreements for industrial companies

India's Central Electricity Regulatory Commission proposes a new financial instrument enabling industrial companies to meet renewable energy targets through virtual contracts, without physical electricity delivery, thus facilitating compliance management.

Share:

Gain full professional access to energynews.pro from 4.90$/month.
Designed for decision-makers, with no long-term commitment.

Over 30,000 articles published since 2021.
150 new market analyses every week to decode global energy trends.

Monthly Digital PRO PASS

Immediate Access
4.90$/month*

No commitment – cancel anytime, activation in 2 minutes.

*Special launch offer: 1st month at the indicated price, then 14.90 $/month, no long-term commitment.

Annual Digital PRO Pass

Full Annual Access
99$/year*

To access all of energynews.pro without any limits

*Introductory annual price for year one, automatically renewed at 149.00 $/year from the second year.

India’s Central Electricity Regulatory Commission (CERC) recently proposed amending its electricity market regulations to introduce a new financial contract called Virtual Power Purchase Agreement (VPPA). This instrument will enable large industrial consumers to meet their renewable energy regulatory obligations without managing physical delivery of produced energy. According to the draft Electricity Market Regulations 2025, this virtual agreement will be negotiated directly between renewable energy producers and industrial consumers. The mechanism provides financial compensation for the difference between the contractually agreed price and the actual market price.

Principle and operation of the VPPA

In practice, the VPPA sets a reference price for electricity between the renewable energy producer and the industrial consumer. The producer then sells electricity on the open market, with the difference between the market price and the contracted tariff financially settled between the two parties. This mechanism allows companies to meet renewable energy commitments without logistical constraints related to physical delivery. The Indian regulator clearly specifies that these virtual contracts are considered over-the-counter (OTC) agreements, expanding the range of financial instruments available to industrial stakeholders.

The CERC emphasizes that the VPPA mechanism primarily aims to simplify compliance for industries with renewable energy obligations. This proposal comes as Indian companies face increasingly stringent regulatory requirements regarding renewable energy consumption. This new instrument could thus reduce administrative complexities associated with these legal constraints.

Criticism and other market developments

However, certain analysts, notably from the organization Ember, have highlighted that such contracts could become mere compliance tools, allowing companies to declare full renewable energy consumption without actual operational changes. The public consultation on this regulatory proposal is open by the CERC until July 14, during which stakeholders may submit their comments.

Additionally, India’s two major exchanges, the National Stock Exchange and the Multi Commodity Exchange of India (MCX), recently announced the imminent launch of electricity derivative contracts. These financial products could complement VPPAs by providing industrial stakeholders with additional tools to manage their exposure to electricity market price fluctuations.

China set a record for clean technology exports in August, driven by surging sales of electric vehicles and batteries, with more than half of the growth coming from non-OECD markets.
A night-time attack on Belgorod’s power grid left thousands without electricity, according to Russian local authorities, despite partial service restoration the following morning.
The French Academy of Sciences calls for a global ban on solar radiation modification, citing major risks to climate stability and the world economy.
The halt of US federal services disrupts the entire decision-making chain for energy and mining projects, with growing risks of administrative delays and missing critical data.
Facing a potential federal government shutdown, multiple US energy agencies are preparing to suspend services and furlough thousands of employees.
A report reveals the economic impact of renewable energy losses in Chile, indicating that a 1% drop in curtailments could generate $15mn in annual savings.
Faced with growing threats to its infrastructure, Denmark raises its energy alert level in response to a series of unidentified drone flyovers and ongoing geopolitical tensions.
The Prime Minister dismissed rumours of a moratorium on renewables, as the upcoming energy roadmap triggers tensions within the sector.
Kuwait plans to develop 14.05 GW of new power capacity by 2031 to meet growing demand and reduce scheduled outages, driven by extreme temperatures and maintenance delays.
The partnership with the World Bank-funded Pro Energia+ programme aims to expand electricity access in Mozambique by targeting rural communities through a results-based financing mechanism.
The European Commission strengthens ACER’s funding through a new fee structure applied to reporting entities, aimed at supporting increased surveillance of wholesale energy market transactions.
France’s Court of Auditors is urging clarity on EDF’s financing structure, as the public utility confronts a €460bn investment programme through 2040 to support its new nuclear reactor rollout.
The U.S. Department of Energy will return more than $13bn in unspent funds originally allocated to climate initiatives, in line with the Trump administration’s new budget policy.
Under pressure from Washington, the International Energy Agency reintroduces a pro-fossil scenario in its report, marking a shift in its direction amid rising tensions with the Trump administration.
Southeast Asia, facing rapid electricity consumption growth, could tap up to 20 terawatts of solar and wind potential to strengthen energy security.
The President of the Energy Regulatory Commission was elected to the presidency of the Board of Regulators of the Agency for the Cooperation of Energy Regulators for a two-and-a-half-year term.
The Australian government has announced a new climate target backed by a funding plan, while maintaining its position as a major coal exporter, raising questions about its long-term energy strategy.
New 15-year agreement for the exploration of polymetallic sulphides in the Indian Ocean, making India the first country with two licences and the largest allocated perimeter for these deposits.
The Argentine government launches a national and international tender to sell 44% of Nucleo Electrica SA, continuing its policy of economic withdrawal through capital markets.
A report by Rhodium Group anticipates stagnation in US emissions, a result of the political shift favouring fossil fuels since Donald Trump returned to office.

Accédez gratuitement à une sélection d’analyses de votre choix et prenez de meilleures décisions, plus vite.