CERC aims to ensure greater transparency and efficiency within the sector.

India’s Central Electricity Regulatory Commission (CERC) has proposed updates to its electricity trading regulations, introducing virtual power purchase agreements (VPPAs) to support renewable energy adoption. Announced in early June 2025, the draft Power Market Regulations, 2025, aim to facilitate power trading without physical delivery, helping consumers meet renewable energy requirements.

VPPAs allow consumers to secure a fixed price with renewable energy producers, who sell the generated electricity on the open market. Financial settlements occur when the VPPA price differs from market rates, ensuring cost predictability. This mechanism supports large-scale consumers in fulfilling their green energy obligations efficiently.

Analysts at Ember noted: “VPPAs provide an innovative approach for large-scale consumers to adhere to their green consumption mandates.” However, they cautioned that these agreements could be used primarily for compliance rather than ensuring actual renewable energy use, potentially impacting their environmental effectiveness.

The draft regulations also align with efforts to modernize India’s power sector. In June 2025, the National Stock Exchange and Multi Commodity Exchange announced plans to launch power derivative contracts. These contracts aim to help stakeholders manage price volatility and improve market liquidity, fostering a more dynamic energy trading environment.

To enhance oversight, CERC’s proposed rules grant increased authority for inspecting and auditing power exchanges and over-the-counter platforms. These measures aim to promote transparency and efficiency in India’s power market. Stakeholders are encouraged to provide feedback on the draft by July 14, 2025, before the regulations are finalized.

The introduction of VPPAs and power derivatives reflects India’s commitment to advancing its renewable energy framework while ensuring a stable and transparent market for electricity trading.

by power-technology