IEX tanks 23%: Brokerages decode what CERC's nod to 'market coupling' mean

IEX shares were locked at the lower circuit on the stock exchanges today as approval to market coupling norm will shift volumes to other competing exchanges, denting growth prospects of IEX

Indian Energy Exchange (IEX) share price today

 

Indian Energy Exchange (IEX) shares tanked 23 per cent to ₹144.65 on the BSE in Thursday's intraday trade after the Central Electricity Regulatory Commission (CERC) approved the implementation of 'market coupling' norms with the Day Ahead Market (DAM), in accordance with the Power Market Regulations of 2021.

 

The stock of the electricity exchange and data platform company has corrected 31 per cent from its 52-week high level of ₹244.35 touched on September 24, 2024. It had hit a 52-week low of ₹151.05 on March 4, 2025.

 

Till 11:30 AM, a combined 22.18 million equity shares had changed hands on the NSE and the BSE. In comparison, the BSE Sensex was trading 0.43 per cent (358 points) lower at 82,368.

 

Implementation of power market coupling

 

According to a Reuters report, the CERC, late on Wednesday, said it has decided to initiate the process of implementing power market coupling.

 

Under the first Phase of these norms, coupling of the DAM will be implemented by January 2026, under which different power exchanges will act as Market Coupling Operators (MCOs) on a round-robin basis.

 

Market coupling is an economic model used in energy markets to create a single, uniform price for electricity across different trading platforms or exchanges.

 

Notably, the Indian power sector is undergoing a transformative shift from a predominantly fossil-based system to an increasingly renewable-centric one, calling for a change in the design of electrical systems, markets, and regulations. Recognising this need, especially to achieve the target of 500 gigawatts (Gw) of renewable capacity by 2030, a series of regulations have been introduced by the CERC. One of the focal areas has been an emphasis on a market-based mechanism to facilitate entry of renewables that includes inter alia 'Power Market Coupling' to enhance liquidity in the wholesale spot market.

 

Implementing market coupling in India involves addressing several important questions and challenges around institutional and structural design, pricing mechanisms to ensure availability and affordability, and more.

 

Market Coupling impact on IEX: What brokerages say?

 

This news will be negative for IEX as volumes will shift to other competing exchanges and thwart the 85 per cent market share of IEX. DAM is the biggest segment of IEX in terms of volumes traded, ICICI Securities said in a note.

 

There have been efforts by regulators to implement Market-Based Economic Dispatch (MBED), Security Constrained Economic Dispatch (SCED) and market coupling in recent years. These instruments seek to centralise the scheduling and dispatch of entire electricity consumption across India to optimise resource use and reduce costs with an objective of "One Nation, One Grid, One Frequency, One Price".

 

Regulators (e.g. CERC) are exploring implementation of market coupling to centralise scheduling and dispatch of power for optimising resources and reducing costs to address perceptible price-discrepancies due to IEX’s 84 per cent market share. Analysts at JM Financial Institutional Securities had said in a June report that the risk-reward is not in favour of nation-wide implementation of market coupling in the near future.

 

"Power markets are continuously evolving with several new policies and regulations notified from time to time to make the market deeper, more participative, and transparent. One of the key regulatory aspects which have direct bearing on the exchange is market coupling in terms of design changes," IEX said in its FY24 annual report.

 

About Indian Energy Exchange (IEX)

 

IEX is India’s premier energy exchange providing a nationwide, automated trading platform for physical delivery of electricity, renewable energy and certificates including renewable energy certificates as well as the energy saving certificates.