In Short : The Central Electricity Regulatory Commission has introduced norms for virtual power purchase agreements to facilitate renewable energy procurement. The framework is aimed at enabling flexibility in meeting clean energy targets, improving market participation, and supporting corporate and utility buyers in procuring renewable power without physical delivery constraints.
In Detail : The Central Electricity Regulatory Commission has introduced a regulatory framework for virtual power purchase agreements as part of efforts to strengthen renewable energy adoption in India. The move is expected to provide greater flexibility in how renewable energy is procured and accounted for under clean energy targets.
Virtual PPAs allow buyers to contract renewable energy capacity without taking physical delivery of electricity. Instead, such agreements are settled financially, enabling consumers to support renewable generation while continuing to source power from their existing supply arrangements.
The new norms are designed to help obligated entities meet renewable purchase obligations more efficiently. By enabling alternative procurement mechanisms, the framework addresses challenges related to location constraints, grid connectivity, and transmission limitations.
Corporate consumers are expected to be key beneficiaries of virtual PPAs, as the mechanism allows them to hedge power price risks and meet sustainability commitments. This is particularly relevant for companies with operations spread across multiple locations.
For renewable energy developers, virtual PPAs open up a wider pool of potential buyers. The framework enhances market access by allowing projects to secure long-term revenue certainty even when direct physical supply arrangements are not feasible.
The introduction of virtual PPA norms also supports the development of more mature and liquid electricity markets. Financial settlement-based contracts can improve price discovery and encourage greater participation in renewable energy trading.
CERC has emphasized the need for transparency, clear settlement mechanisms, and defined contractual structures to ensure the smooth functioning of virtual PPAs. The norms aim to balance market innovation with regulatory oversight and system stability.
The framework aligns with India’s broader energy transition goals, which include rapid expansion of renewable capacity and deeper integration of clean energy into the power system. Flexible procurement models are seen as critical to achieving these objectives.
Overall, the introduction of virtual PPA norms marks a significant regulatory step in modernising renewable energy procurement. By enabling new contracting models, CERC is supporting accelerated renewable deployment while strengthening market efficiency and sustainability outcomes.
