The Central Electricity Regulatory Commission (CERC) has proposed amendments to its Power Market Regulations, 2021, to expand the scope of over-the-counter (OTC) power markets.

An OTC market is a decentralized marketplace where financial instruments are traded directly between two parties without the use of an intermediary platform.

The OTC market now includes delivery-based energy contracts, capacity contracts, renewable energy certificates, contracts related to virtual power purchase agreements  (VPPA), battery energy storage system contracts, and power banking. The amendments also aim to provide transparency for VPPAs under the OTC market.

VPPAs are non-transferable, financial contracts entered into between the consumer and the renewable energy generator. The consumer agrees to pay the strike price (VPPA price) to the renewable energy generator for the entire duration of the agreement.

The renewable energy generator will sell the electricity through the power exchanges or any other authorized power market.

The difference between the VPPA prices and the market prices is bilaterally settled between the parties.

The prices and other terms of the contract in the OTC market will be determined either mutually between the buyer and seller or through a trading licensee. It could also be through an OTC platform or a competitive bidding process.

The registration of an OTC platform will be in force for ten years from the date of registration unless it is revoked or cancelled earlier.

The OTC platform will facilitate transactions between buyers and sellers, allowing them to execute contracts without incurring counterparty or credit risk on behalf of either party.

The CERC has also increased the net worth requirement for OTC market applicants to ₹350 million (~$4.05 million) from ₹10 million (~$115913). Applicants must meet the net worth criteria within 30 days of registering for the OTC platform.

OTC platform operators must have a minimum net worth of ₹35 million (~$4.05 million) at all times.  They must meet the minimum net worth criteria within 12 months of the issue of this regulation.

In May 2025, the CERC released draft guidelines for VPPAs, which could evolve into another instrument to enable designated consumers to meet their renewable energy consumption obligation targets.

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