The Promise Of ‘Virtual' Power Purchase Agreements

INTRODUCTION

Given that your company needs/wants to acquire or generate renewable energy ("RE") - should, and can, you enter into a 'virtual' power purchase agreement ("PPA," and such 'virtual' PPAs, "VPPAs") in India?

Physical PPAs vs. VPPAs

While a PPA is usually the main contract in energy sector transactions where the 'offtaker' (often a state-owned electricity distribution company ("discom")) decides to buy power from a generating entity ("genco"), PPAs may also be entered into between two or more private parties, especially in jurisdictions where a competitive power market exists - such as the one increasingly emergent in India. In the context of renewable PPAs, parties specifically contract to procure/sell RE.