The Central Electricity Regulatory Commission (CERC) has issued guidelines for virtual power purchase agreements (VPPAs) to facilitate compliance with renewable consumption obligation (RCO) targets by designated consumers.
The guidelines, notified under the CERC (Power Market) Regulations, 2021, provide a regulatory framework for VPPAs as non-transferable specific delivery-based over-the-counter contracts. Under the framework, a VPPA is defined as a bilateral arrangement between a renewable energy generating station and a consumer or designated consumer, under which the generator sells electricity through a power exchange or other authorised modes, while renewable energy certificates (RECs) issued for the contracted capacity are transferred to the consumer for renewable purchase obligation or RCO compliance. The consumer guarantees payment of a mutually agreed strike price, with the difference between the strike price and the market settlement price settled bilaterally. The guidelines specify that VPPAs must be non-tradable, non-transferable, and have a minimum tenure of one year, with RECs extinguished upon use for compliance.