The Central Electricity Regulatory Commission (CERC) has received approval from the Appellate Tribunal for Electricity to proceed with framing regulations for power market coupling, a development that could significantly transform electricity price discovery and trading mechanisms in India.
The tribunal dismissed a petition challenging the regulator’s earlier move toward implementing market coupling, stating that objections were premature since formal regulations are yet to be notified. The ruling effectively clears the path for CERC to draft and notify a structured regulatory framework governing the coupling of power exchanges.
Market coupling refers to a mechanism that enables uniform price discovery across multiple power exchanges by consolidating bids and matching them through a common algorithm. Instead of each exchange determining prices independently, the system aims to establish a single market-clearing price, thereby improving transparency, efficiency and optimal utilisation of transmission capacity.
The regulator had earlier proposed implementing market coupling in phases, beginning with the day-ahead market before expanding to real-time market segments. The objective is to streamline operations, minimise price fragmentation and enhance overall market efficiency.
Stakeholders had raised concerns regarding operational implications and competitive dynamics within the power trading ecosystem. However, the tribunal clarified that regulatory challenges may be pursued after the formal notification of norms, if grounds arise.
India’s power trading landscape currently includes multiple exchanges operating independent price discovery systems. Analysts believe that market coupling could create a more integrated electricity market, promote fair competition and potentially stabilise price volatility by aligning demand and supply across platforms.
With regulatory clearance now in place, CERC is expected to initiate detailed consultations with stakeholders before finalising the framework. The move is viewed as a significant step in advancing power sector reforms and aligning India’s electricity markets with international best practices.
