Virtual Power Purchase Agreements (VPPAs) are emerging as a game-changer in India’s clean energy transition, especially for large corporates aiming to meet their sustainability goals. A VPPA is a financial contract between a renewable energy generator and a corporate buyer, wherein the buyer does not take the physical delivery of electricity but pays a fixed price for the energy generated. The energy is sold on the power exchange, and the buyer receives Renewable Energy Certificates (RECs) to meet its green targets.
India’s growing number of RE100 companies—those committed to sourcing 100% of their electricity from renewables—has led to a sharp rise in interest in VPPAs. These agreements offer flexibility, scalability, and the opportunity to support new renewable capacity without the need for physical grid connectivity. VPPAs are especially suitable for commercial and industrial (C&I) consumers with operations spread across different regions, as they allow centralized procurement of clean power while bypassing the complexities of state-wise power purchase regulations.
However, regulatory uncertainty has been a significant roadblock. Many corporates have been hesitant to enter into VPPAs due to the lack of clear regulatory oversight, particularly regarding the treatment of such contracts under open access and power market mechanisms.
The recent proposed amendment by the Central Electricity Regulatory Commission (CERC) is a highly welcome development. By providing clarity and regulatory support for VPPAs, the amendment could unlock significant investment in merchant renewable energy.
Aditya Malpani, Senior Director & Regional Business Head – West from AMPIN Energy Transition quotes the proposed amendment by the CERC as a positive step towards enabling sustainability off-takers to achieve their RE 100 goals. Many large corporations have shown interest in exploring Virtual Power Purchase Agreements (VPPAs) to meet their 100% renewable energy targets. However, the lack of clarity regarding regulatory oversight has been a concern for them.
With this proposed clarification, we anticipate that approximately 4-5 GW of merchant renewable energy capacity, supported by VPPA mechanisms, could be installed within the next 3-5 years.
VPPAs can thus play a critical role in revolutionizing India’s sustainability journey. They enable large corporates to decarbonize their operations cost-effectively while supporting the national goal of reaching 500 GW of non-fossil fuel capacity by 2030. The VPPA model bridges the gap between demand for clean energy and renewable project development, thereby driving both climate action and energy sector reforms.
With the right policy support, VPPAs could significantly accelerate India’s clean energy adoption, making corporate sustainability commitments a powerful lever for national climate goals.
