The Central Electricity Regulatory Commission (“CERC”) published the Draft Power Market (First Amendment) Regulations, 2025 (“Draft Regulations”) on 17th June 2025, intending to modify and update the existing Power Market Regulations, 2021. These Draft Regulations reflect India’s evolving energy landscape, particularly the growing emphasis on clean energy procurement, decentralised trading platforms, and enhanced market transparency.
The Draft Regulations invite comments from stakeholders and the general public until 14th July 2025. These changes are significant in light of India’s goals around energy transition, decarbonisation, and digitalisation of the power trading ecosystem.
Salient Features
Formal Introduction of Virtual Power Purchase Agreements (VPPA)
One of the most notable introductions in the Draft Regulations is the recognition of Virtual Power Purchase Agreements (VPPAs). VPPAs are contractual instruments that enable renewable energy procurement without requiring physical delivery of electricity. Under the proposed framework, the RE generator sells electricity in the power exchange, and the difference between the market price and the VPPA-agreed price is settled bilaterally between the generator and the consumer. This mechanism supports corporate decarbonisation goals, particularly for designated consumers under the Energy Conservation Act, 2001.
Strengthening the purview of OTC Market Framework
The Draft Regulations aim to broaden the obligations, roles and structure of Over-the-Counter (OTC) trading in the Indian power market. Several key terms are updated or introduced to bring clarity and uniformity. The scope of OTC contracts is expanded to include not only delivery-based and capacity contracts but also BESS (Battery Energy Storage System) contracts, banking of power, Renewable Energy Certificates (RECs), and VPPAs. Along with being added to the definition of markets.
A 10-year term of registration has now been ascertained for OTC platforms. Further they are now under obligation to not take counter party risks or credit risk on behalf of buyers or sellers. Few regulations have been altered to commensurate the authority of Power Exchanges and OTC platforms. The delivery procedure has been reformed in accordance with the Connectivity and GNA Regulation and the Grid Code. These amendments aim to increase the functionality, diversity, and certainty of market instruments available to participants.
Alignment with Connectivity and GNA Regulations, 2022
The Draft Regulations replace all references to “Open Access Regulations” with the “Connectivity and General Network Access (GNA) Regulations, 2022”. This ensures consistency with the latest inter-State transmission frameworks and allows for seamless integration of power procurement, scheduling, and grid access mechanisms across market segments.
Enhanced Financial and Operational Requirements for OTC Platforms
The Draft Regulations tighten the financial criteria for registration and continued operation of OTC platforms. A minimum net worth of ₹35 crore along with increased stringency in documentation is mandated for platform operators and applicants, ensuring only financially robust entities can enter or sustain operations in this critical segment. Additionally, platforms registered before the Draft Regulations comes into force will be granted a one-year compliance period to meet this requirement.
Greater Regulatory Oversight and Audit Mechanisms
To ensure transparency and adherence to regulatory norms, the Draft Regulations empowers CERC to conduct audits, inspections, or inquiries into Power Exchanges or OTC Platforms either directly or through designated agencies. The amendment clarifies the cooperative obligations of platform operators and their personnel during such inspections, thereby reinforcing accountability in market operations.
Conclusion
The Draft CERC Power Market (First Amendment) Regulations, 2025, reflect the Commission’s continued efforts to modernise and diversify India’s electricity markets. By integrating virtual instruments like VPPAs, strengthening the OTC trading framework, and ensuring regulatory consistency with newer transmission regulations, the draft seeks to catalyse investment, deepen market liquidity, and drive India closer to its clean energy and net-zero targets. Stakeholders are encouraged to review and submit their comments before the 14th July 2025 deadline to contribute to a more efficient and future-ready power market architecture.
