CERC Approves Rules for Virtual Power Deals to Help Companies Meet Green Energy Targets

CERC Approves Rules for Virtual Power Deals to Help Companies Meet Green Energy Targets

January 1, 2026

India’s Central Electricity Regulatory Commission (CERC) has approved a new regulatory framework governing Virtual Power Purchase Agreements (VPPAs) — a financial instrument that allows companies to support renewable energy development and meet their green energy commitments without needing to physically receive the power they’re funding.

What Is a Virtual PPA?

A Virtual Power Purchase Agreement is a contract between a corporate buyer and a renewable energy generator in which the buyer agrees to pay a fixed price for electricity — but the power itself is delivered to the grid, not directly to the buyer’s facility. The buyer receives the financial difference between the contracted price and the prevailing market price, along with Renewable Energy Certificates (RECs) or equivalent green credentials.

This structure is particularly useful for companies whose facilities are spread across multiple locations or states, making direct physical delivery of renewable power logistically complex or cost-prohibitive. VPPAs allow such companies to support new renewable energy capacity, meet their Scope 2 emissions reduction targets, and demonstrate credible sustainability commitments — all without the infrastructure requirements of a traditional open access arrangement.

Why CERC’s Approval Matters

Until now, the legal and regulatory framework for VPPAs in India was unclear, creating uncertainty for both corporate buyers and renewable energy developers interested in structuring such deals. CERC’s new rules provide the regulatory clarity needed for VPPAs to become a mainstream corporate procurement instrument in India.

The approval is expected to unlock significant new investment in renewable energy from large corporate buyers — including multinational companies with global net-zero commitments that require verifiable green energy procurement in their Indian operations.

Who Can Benefit?

VPPAs are particularly relevant for large companies that have made public sustainability or net-zero commitments but face practical difficulties in sourcing all their power through direct open access arrangements. Industries likely to benefit include IT and data centres, manufacturing conglomerates with multi-state operations, retail and FMCG companies, and financial institutions with ESG reporting requirements.

For smaller businesses or those with simpler energy infrastructure, traditional open access procurement or rooftop solar may still be the most straightforward route to green energy adoption.

The Bigger Picture

CERC’s move to formalise VPPAs is part of India’s broader effort to develop a mature, market-driven renewable energy ecosystem that can serve the diverse needs of commercial and industrial consumers. As India’s corporate sector faces growing pressure from global clients, investors, and regulators to demonstrate credible green energy use, instruments like VPPAs give businesses more flexible tools to meet these expectations.

Learn more about renewable energy procurement options for your business on our Services page, or contact our team for a personalised consultation.