Virtual Power Purchase Agreements: Catalyst For Renewable Energy Transformation In India

Introduction

India's commercial and industrial ("C&I") sector is increasingly prioritizing renewable energy as part of broader sustainability and cost-reduction strategies. While traditional Power Purchase Agreements ("PPAs") have facilitated clean energy procurement, they are often accompanied by operational and regulatory constraints, such as grid connectivity challenges, exposure to financially weak Distribution Companies ("DISCOMs"), and complex interstate permissions. In recognition of the growing need for alternative structures, the Central Electricity Regulatory Commission ("CERC") has recently issued Draft Guidelines for Virtual Power Purchase Agreements¹ ("Draft Guidelines") to provide a regulatory framework for Virtual Power Purchase Agreements ("VPPAs"), thereby seeking to ensure transparency, contractual certainty, and appropriate risk allocation in such transactions.