The Central Electricity Regulatory Commission (CERC) has directed a phased implementation of market coupling across power exchanges, starting with the day-ahead market (DAM) coupling by January 2026.

The DAM coupling will be executed in round-robin mode, with the role of market coupling operator (MCO) rotating among the three operational power exchanges—Indian Energy Exchange, Power Exchange India, and Hindustan Power Exchange.

Grid-India will serve as the fourth MCO for audit and backup purposes.

CERC’s decision follows a shadow pilot study by Grid-India which revealed that DAM coupling resulted in an overall welfare gain of ₹380 million (~$4.39 million), or 0.3%, and a 52 million units (MU) or 0.2% increase in volume cleared.

The price impact was negligible due to the skewed liquidity distribution, with welfare gains recorded in every market session.

For real-time market (RTM) coupling, the simulation showed a ₹7.2 million (~$83,325.53) welfare gain (0.01%) and a 1.54 MU (0.01%) increase in cleared volume, again with minimal impact on market prices.

For the RTM-security constrained economic dispatch (SCED) coupling, the pilot study demonstrated daily net savings of ₹14 million (~$162,021.86) in cost optimization. However, it also showed a ₹1 (~$0.012)/MWh increase in average cost due to lower demand. The model also led to reduced volatility in the average clearing price.

While DAM coupling is now scheduled for operational rollout, RTM coupling has been deferred and will be revisited after gaining implementation experience from the former. The RTM-SCED coupling has been marked for further stakeholder consultation and regulatory deliberation due to its complexity.

CERC also directed Grid-India to develop software for a shadow pilot for the term-ahead market (TAM), which will include contingency contracts. A three-month pilot will be conducted, followed by a feedback report submission.

The Commission instructed all power exchanges to provide the required data to Grid-India and the regulator to support implementation. CERC staff have also been tasked with initiating regulatory amendments needed to operationalize DAM coupling.

Background

The latest order builds on a previous directive issued by the Commission, which initiated a shadow pilot to test the feasibility of market coupling. Grid-India was instructed to develop the necessary software and run the pilot for four months, submitting monthly operational reports and a final feedback report.

The market coupling initiative aims to facilitate uniform price discovery, optimize the use of transmission networks, and increase buyer-seller surplus.

In June this year, CERC proposed amendments to its Power Market Regulations, 2021, to expand the scope of over-the-counter power markets.