From pv magazine India
India’s CERC is set to release final guidelines for VPPAs, potentially unlocking financing for more than 40 GW of uncontracted renewable energy projects across the country.
Speaking during a webinar organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) on VPPAs, Dr. S.K. Chatterjee, chief of regulatory affairs at CERC, said the commission was “almost at the final stage of finalizing” the framework after receiving extensive stakeholder feedback on draft guidelines released in May.
The announcement signals a breakthrough for the country’s renewable energy sector, which has long faced challenges in traditional power purchase agreements (PPA), particularly due to frequent payment delays from distribution companies.
“We want these kinds of agreements to align with our larger objectives of achieving sufficient renewable energy capacities, which could be realized through means other than traditional power purchasing agreements,” Chatterjee said during the webinar.
The commission conceived virtual PPAs to serve two critical purposes: enabling stakeholders to obtain green attributes for environmental, social and governance compliance without requiring traditional power purchase agreements, and supporting more than 40 GW of renewable energy projects.
Virtual PPAs allow corporate buyers to financially underwrite renewable projects without taking physical delivery of electricity, instead receiving renewable energy certificates as proof of green power procurement.
The regulator has structured the guidelines to ensure VPPAs qualify as non-transferable specific delivery contracts rather than financial derivatives, following consultations with the Securities and Exchange Board of India. Physical delivery of electricity must occur, though not directly to the corporate buyer, with the power sold into wholesale markets instead.
Ashish Mittal, director of consulting – energy and commodities at CRISIL Intelligence, noted the global precedent for virtual agreements, adding that 80% of corporate renewable energy procurement in the United States now uses virtual structures.
“It is time for India to embrace it,” Mittal said, while calling for standardized contracting frameworks and formal dispute resolution mechanisms.
Rajasthan has endorsed the framework despite concerns about market pricing volatility during solar generation hours. Rohit Gupta, chairman and managing director of Rajasthan Renewable Energy Corp., said the state would “support this initiative as much as possible” while highlighting potential integration challenges.
Subhro Paul, director of financial and commercial appraisal at the Central Electricity Authority, said the mechanism would benefit both industrial buyers seeking renewable energy compliance and project developers requiring revenue certainty. He described it as “instrumental in bringing up a large quantity of renewable power” based on international experience.
The final guidelines will determine whether corporate buyers can transfer agreements to subsidiaries and address technical aspects of renewable certificate accounting. Industry observers expect the framework to accelerate India’s target of 500 GW of renewable capacity by 2030, providing an alternative to traditional utility-scale procurement models.
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