The announcement triggered contrasting reactions across power exchange-linked counters, with shares of Indian Energy Exchange (IEX) falling sharply by 26% while PTC India gained ground due to its stake in Hindustan Power Exchange—one of the expected beneficiaries of the new regime.
What is market coupling?
Market coupling, as announced by the CERC late Wednesday, involves the centralised matching of bids from various power exchanges to arrive at a uniform market clearing price. This move is aimed at achieving price convergence across different electricity markets and streamlining the process of price discovery.
To begin with, the coupling will apply to the Day-Ahead Market (DAM) segment and will follow a ‘round-robin’ mode for operator rotation, with implementation targeted by January 2026.
The new system stipulates that all registered power exchanges will take turns acting as the market coupling operator, with Grid-India designated as the backup and audit operator. The CERC has further directed all exchanges to share data with Grid-India and support the phased rollout.
Future phases may include coupling the real-time market and term-ahead market following additional consultations and pilot runs.
How will market coupling impact IEX?
Currently, IEX is the dominant platform for electricity spot price discovery in India. However, under the new framework, other exchanges, including Hindustan Power Exchange, will also participate in market coupling operations.This is expected to dilute IEX’s influence in the price discovery process and create more equitable market dynamics.
It is anticipated that the regulatory change may affect IEX’s long-held pricing advantage and trading volumes. As a result, IEX shares declined sharply during Thursday’s session. In contrast, PTC India shares rallied as the market cheered the prospects of its associated platform, Hindustan Power Exchange, gaining relevance and visibility under the new market structure.
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“The move is a regulatory game-changer—it transfers price discovery from individual exchanges to a central clearing mechanism managed by the Grid Controller of India. This undermines IEX’s historical dominance in setting spot electricity prices,” said Harshal Dasani, Business Head at INVasset, PMS.
Currently, IEX commands over 90% market share in the Day-Ahead Market (DAM) and Real-Time Market (RTM), both of which contribute significantly to its revenue.
“With centralised price determination, the very role that made IEX indispensable, competitive price discovery, stands diluted. That means less trading advantage, lower transaction margins, and shrinking moats,” he added.
He believes that with the core business model under pressure and limited clarity on long-term profitability, markets have rightly reacted. For IEX, the days of monopoly-like pricing power may now be history.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)