CERC Proposes Key Amendments to Power Market Rules, Introduces VPPAs for Green Energy Push

The Central Electricity Regulatory Commission (CERC) has issued a draft notification proposing significant amendments to its Power Market Regulations, 2021. The proposed changes aim to modernise India’s electricity market framework, expand the role of Over-the-Counter (OTC) platforms, and introduce new contract mechanisms like Virtual Power Purchase Agreements (VPPAs), all while aligning the regulations with recent legislative and policy updates.

The draft, is titled 'Central Electricity Regulatory Commission (Power Market) (First Amendment) Regulations, 2025. The amendments expand the regulatory definitions to include newer constructs like General Network Access (GNA) and Designated Consumers as defined under the Energy Conservation Act, 2001, while updating terminology to reflect the shift from 'Open Access' to the recently enacted 'Connectivity and GNA Regulations'.

One of the most transformative inclusions is the formal recognition of VPPAs as a legitimate OTC contract category. These contracts allow a renewable energy generator and a consumer to agree on a fixed tariff, with the generator selling electricity on the market and settling the price difference bilaterally. The VPPA framework enables industries to support renewable energy generation without the need for physical delivery, thus removing grid constraints from clean energy procurement strategies.

The draft also proposes revisions to the functioning of OTC platforms. Platforms will now be allowed to facilitate trading in Renewable Energy Certificates (RECs), Battery Energy Storage System (BESS) contracts, power banking, capacity contracts, and VPPAs. However, OTC platforms are expressly prohibited from taking on counterparty or credit risk, and will function purely as transaction facilitators. These platforms must now maintain a minimum net worth of INR 35 crore at all times, a sharp increase from previous requirements. Existing operators have been granted a 12-month window to comply, subject to submission of audited financials.

Furthermore, the registration tenure for OTC platforms has been extended from earlier terms to 10 years, giving longer-term operational certainty to market participants. The Commission has also bolstered its enforcement authority, allowing it to inspect or audit any Power Exchange or OTC Platform through its own officers or third-party agencies. It may also direct the cancellation of platform memberships in case of regulatory violations, and mandate full cooperation during audits or inquiries.

The definition of 'market' has been broadened to explicitly include OTC platforms alongside traditional Power Exchanges, reflecting the evolving nature of electricity trade in India. Additionally, a slew of technical definitions have been revised or introduced to bring the regulation in sync with recent infrastructure and policy changes, such as the 2022 Connectivity and GNA Regulations.

By reshaping the contract landscape and fortifying regulatory oversight, CERC’s proposed amendments seek to accelerate the transition to a more flexible, investor-friendly, and renewable-ready electricity market. The draft has been made available for public consultation, with stakeholders invited to submit comments before the final notification is issued.