CERC to Finalise Virtual PPA Guidelines Soon to Unlock Financing for 40 GW of Stalled RE Projects
The Central Electricity Regulatory Commission is set to finalise guidelines for virtual power purchase agreements, a move expected to unlock financing for over 40 GW of stranded renewable projects.
September 19, 2025. By Mrinmoy Dey
Dr S.K. Chatterjee, Chief of Regulatory Affairs at the CERC, told FICCI’s webinar on Virtual Power Purchase Agreements (VPPA) that the commission was “almost at the final stage of finalising” 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 concerns with traditional power purchase agreements regarding delays in payment from distribution companies, FICCI said in a statement.
“We want these kinds of agreements to align with our larger objectives of achieving sufficient renewable energy capacities, which could be realised 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 over 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, Consulting – Energy and Commodities, CRISIL Intelligence, highlighted the global precedent for virtual agreements, noting that 80 percent 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 standardised 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 Corporation, stated that the state would “support this initiative as much as possible” while highlighting potential integration challenges.
Subhro Paul, Director (Financial and Commercial Appraisal), Central Electricity Authority, noted the mechanism would benefit both industrial buyers seeking renewable energy compliance and project developers requiring revenue certainty, describing 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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