CERC moots new norms for market coupling across power exchanges

Draft rules aim to centralise price discovery via Grid India, improving transparency, efficiency and competition in India's electricity markets

Central Electricity Regulatory Commission (CERC) last week proposed market coupling to centralise power market price discovery, with Grid India designated as the market coupling operator (MCO).

 

In the draft amendment to the CERC (Power Market) Regulations, 2021, the regulator has appointed Grid India to centrally manage the price discovery process by combining buy and sell bids from all power exchanges into a single pool. To carry out this role, Grid India will set up a dedicated division. It will also be responsible for the operation and management of market coupling, as per the notification.

 

Market coupling is a phenomenon used in the energy sector, especially in electricity markets, to improve the efficiency and integration of multiple interconnected markets.

 

Noting that the development is a step forward towards an integrated and efficient national electricity market, Vivek Singla, MD and CEO, Power Exchange India Limited (PXIL), said in a statement, "This regulatory development aligns with our long-standing vision that market coupling is the 'need of the hour' to address market fragmentation and sub-optimal transmission utilisation.”

 

In addition to enabling uniform price discovery, coupling will also maximise economic surplus, optimise grid usage, and enhance competition and liquidity, the exchange said. In theory, the aggregation of bids across all exchanges eliminates the confusion caused by multiple prices for the same product and ensures that all participants benefit from the most efficient market-clearing price.

 

PXIL observed that the MCO can ensure optimal utilisation of transmission capacity, reducing the occurrence of artificial congestion that previously occurred when exchanges operated in silos.

 

When implemented, the move will improve price transparency, said Ankit Jain, vice president, co-group head–corporate ratings, ICRA. "It could change how exchanges operate and how participants bid, with the likelihood of some short-term adjustment challenges, with a central price discovery system," said Jain.

 

Grid India, with the approval of the Commission, will develop detailed rules—to be known as Power Market Coupling Procedure (PMCP)—within six months of the notification of these amendments. Besides including the roles and responsibilities of the MCO, power exchanges, and National Load Despatch Centre, these rules will also define submission of bids, features of price discovery, scheduling and delivery, clearing and settlement.

 

The rollout is proposed to happen in phases, starting with the day-ahead market (DAM) and real-time market (RTM). Stakeholders are required to submit their comments and suggestions by May 16, 2026. 

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