CERC has notified guidelines for VPPAs that allow large electricity consumers to meet their renewable energy obligations without physically purchasing green power. Under the framework, designated consumers can enter into bilateral agreements with renewable energy generators for a minimum tenure of one year. These contracts are non-tradable and non-transferable, according to a report by The Economic Times.
VPPAs are financial arrangements that enable consumers to claim renewable compliance without taking physical delivery of electricity. While the consumer’s actual power needs continue to be met through conventional sources such as distribution companies or captive generation, the VPPA creates a financial settlement mechanism between the consumer and the renewable generator.
Under the new structure, renewable energy producers will continue to sell electricity through power exchanges, while large consumers gain flexibility in meeting renewable norms. The framework is expected to provide revenue certainty to renewable generators, simplify compliance for bulk consumers, and enable aggregation of demand across regions.
The VPPA model is likely to benefit large commercial and industrial users, such as data centre operators and multinational technology firms, by offering an alternative pathway to renewable energy compliance without altering existing power procurement arrangements.
The new rules permit designated consumers to sign bilateral, non-tradable, and non-transferable financial contracts with renewable energy generators for at least one year. Since no physical power delivery is involved, these agreements function purely as financial instruments.
The framework allows large consumers to meet renewable purchase obligations without routing transactions through power exchanges. This has sparked concerns that demand for exchange-based renewable power products could decline, potentially weighing on trading volumes for platforms such as IEX.Indian Energy Exchange has delivered a weak performance over the past year, with the stock declining around 25%. The shares are currently trading close to their 52-week low of Rs 130, reflecting sustained selling pressure and cautious investor sentiment amid regulatory and sector-specific concerns.
From a valuation perspective, IEX is trading at a price-to-earnings (P/E) ratio of 26.49, indicating that investors are paying over 26 times the company’s earnings. Meanwhile, the price-to-book (P/B) ratio stands at 10.91, suggesting the stock is valued at a significant premium to its book value, a factor that may be influencing investor caution in the current environment.
On the technical front, the 14-day Relative Strength Index (RSI) for IEX is at 44.0, pointing to neutral-to-weak momentum. Typically, an RSI reading below 30 signals an oversold condition, while a level above 70 indicates an overbought zone. The current RSI suggests the stock is neither oversold nor showing signs of a strong rebound yet.
Further highlighting the weak trend, Indian Energy Exchange is trading below all eight of its key Simple Moving Averages (SMAs). This alignment generally indicates a bearish technical setup, suggesting that the stock remains under pressure in the near term unless a clear reversal emerges.
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(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. These do not represent the views of The Economic Times.)
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