The Central Electricity Regulatory Commission (CERC), on December 24, 2025, issued the Guidelines for Virtual Power Purchase Agreements (VPPAs) to facilitate compliance with Renewable Consumption Obligation (RCO) targets by Designated Consumers. These guidelines recognise VPPAs as Non-Transferable Specific Delivery (NTSD) based Over-The-Counter (OTC) contracts, evolved in line with international practices, and framed pursuant to Regulation 54(3) of the CERC (Power Market) Regulations, 2021, following consultations with SEBI and the Ministry of Power.
The Guidelines define the legal and operational framework for VPPAs, under which a Consumer or Designated Consumer enters into a bilateral contract with a Renewable Energy Generating Station (REGS) at a mutually agreed VPPA Strike Price. While physical electricity generated by the REGS is sold through power exchanges or other authorised modes for purposes other than RPO/RCO compliance, the associated Renewable Energy Certificates (RECs) are transferred to the Consumer or Designated Consumer for meeting their RPO/RCO obligations. VPPAs are mandated to be non-tradable, non-transferable, and of a minimum duration of one year.
Further, the Guidelines provide for bilateral settlement of the difference between the VPPA Strike Price and the market settlement price, eligibility and extinguishment of RECs to avoid double counting, and clarity on compliance accounting. Disputes arising under VPPAs are to be resolved as per contractual terms. The framework strengthens regulatory certainty for innovative renewable procurement mechanisms and supports India’s broader non-fossil energy targets under the Energy Conservation Act, 2001.
[No. L-1/257/2020/(PMR-4)/CERC]
