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					</table>The Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/index-en.html" target="_blank" rel="noopener">CERC</a>) has proposed including pumped storage projects as an eligible category in the High Price-Day Ahead Market (HP-DAM) segment on power exchanges.
The proposal follows recommendations from the National Load Despatch Centre (NLDC) and the Ministry of Power to include pumped storage projects in the HP-DAM eligibility list.
The Union Government <a href="https://www.mercomindia.com/government-high-price-day-ahead-market-surplus-power-portal" target="_blank" rel="noopener">launched</a> HP-DAM in 2023, aiming to ensure greater power availability during the peak demand season.
Background
Through orders issued in 2023, the Commission permitted power exchanges to introduce gas-based generating stations using imported regasified liquefied natural gas and naphtha; imported coal-based generating stations using only imported coal; and battery energy storage systems (BESS) as categories of generating stations in the HP-DAM segment.
It also directed NLDC to compile a list of recommendations to include other resources in the HP-DAM eligibility list.
In April 2023, the Ministry of Power called for pumped storage and other storage projects to be allowed to participate in all market segments of power exchanges, including HP-DAM, so that they could take advantage of the price differential between peak and off-peak tariffs.
In July 2026, NLDC recommended that the Commission include pumped storage projects in HP-DAM&#8217;s eligibility list. Shortly after, the Ministry of Power backed the suggestion, given the critical role of such projects in providing long-duration energy storage, peak power support, and grid-balancing services.
In support of its recommendation, NLDC submitted an analysis of the current capacity and levelized tariffs of pumped storage projects, HP-DAM liquidity, and the opportunity available in the Day Ahead Market (DAM). According to NLDC, pumped storage projects’ current operational capacity in India was 7.43 GW. Of the total operational capacity, 4.85 GW was on-stream capacity and 2.58 GW was off-stream.
It highlighted that pumped storage projects with merchant capacity may have an additional market avenue to undertake energy arbitrage during periods of high price discovery.
NLDC also examined prevailing liquidity and market-clearing outcomes in HP-DAM from April 2025 to July 2026. The HP-DAM liquidity outcomes showed that market clearing occurred on 47 days (9.65% of the analysis period) and 965 time blocks (2.06% during the analysis period), indicating that HP-DAM currently constitutes a relatively limited market segment in terms of trading activity and liquidity.
While HP-DAM has demonstrated higher market clearing prices relative to DAM during certain intervals, actual revenue realization for projects might vary with prevailing market conditions and liquidity levels.
In its analysis, NLDC observed that the levelized costs of such projects can range from ₹3.3 ($0.0347)/kWh to ₹4.98 ($0.0524)/kWh for the levelized fixed cost component. At the same time, the effective landed tariff may reach ₹8.92 ($0.0938)/kWh, depending on project-specific characteristics and operating assumptions.
NLDC also submitted an analysis of the price differential between solar and evening peak hours in the DAM between April 2025 and July 2026 to assess the arbitrage opportunity available to pumped storage projects. It noted that market-clearing prices differed significantly between solar, which averaged around ₹2.2 ($0.0231)/kWh, and evening peak hours, which averaged about ₹6.57 ($0.0691)/kWh.
NLDC observed that the difference between solar hour and evening peak hour prices indicated a potential arbitrage opportunity of approximately ₹4.37 ($0.0460)/kWh for pumped storage projects.
Commission’s Analysis
Based on NLDC’s recommendation and analysis, the Commission noted that pump storage projects’ participation in HP-DAM would provide them with an opportunity to access periods of higher demand and improve their commercial viability. It would also facilitate greater utilization of projects’ flexible storage resources during periods of constrained supply.
Considering the growing operational and under-construction capacity of pumped storage projects and the need for flexible reserves, the Commission expressed the preliminary view that such projects may be permitted to participate in the existing HP-DAM segment.
The Commission proposed initiating suo motu proceedings and issuing a public notice to hear stakeholders under Regulation 56 of the Conduct of Business Regulations, 2023. It directed the parties concerned to submit their written representations within 15 days of the October 28, 2026 order.
India’s total installed pumped storage project (PSP) capacity is expected to <a href="https://www.mercomindia.com/cea-highlights-pumped-storage-as-base-load-to-address-peak-power-demand" target="_blank" rel="noopener">reach</a> approximately 87 GW by 2033-34, according to the Central Electricity Authority’s Roadmap to 100 GW of Hydro Pumped Storage Projects by 2035-36.
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					</table>The Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/" target="_blank" rel="noopener">CERC</a>) recently approved Power Exchange India’s (<a href="https://powerexindia.in/" target="_blank" rel="noopener">PXIL</a>) proposal to introduce high price bilateral market segment.
The Commission also approved PXIL’s proposal to introduce the High Price Term-Ahead Market (HP-TAM) and contingency contracts.
The central regulator directed <a href="https://grid-india.in/" target="_blank" rel="noopener">GRID-INDIA</a> to submit a report on the experience and performance of HP-TAM and HP-contingency contracts within three months from the date of introduction of these contracts.
PXIl had filed a petition seeking approval for introducing a high-price bilateral market segment with contracts operating under the provisions of CERC’s Power Market Regulations 2021 on PXIL’s PRATYAY platform.
Background 
PXIL has been offering contracts in the Integrated Day Ahead Market (IDAM), Real-Time Market (RTM), TAM, Green Term-Ahead Market (GTAM), Renewable Energy Certificates (RECs), and Energy Saving Certificates (ESCs) since 2008.
On April 11, 2023, the Commission had granted approval to PXIL for the introduction of HP-DAM on PXIL’s PRATYAY platform.
PXIL submitted that since the HP-DAM contract is transacted a day before delivery, buyers get exposed to price volatility in this segment. To overcome such a situation, it would be beneficial if the eligible sellers and buyers entered the transaction much in advance.
Accordingly, PXIL proposed to introduce seven new high-price bilateral market contracts. These contracts include a high-price intra-day contract, high-price day-ahead contingency contract, high-price daily contract, high-price weekly contract, high-price monthly contract, high-price any-day single-sided contract with reverse auction initiated by the buyer, and high-price any day single sided contract with forward auction initiated by seller.
Floor Price
GRID-INDIA submitted that in organized electricity markets, price formation plays a crucial role in determining market clearing prices for energy and ancillary services. It expressed concern that implementing a floor price could weaken the market signal for flexible resources like energy storage.
GRID-INDIA argued that as more flexible resources are integrated into the market, primarily to take advantage of price arbitrage and enhance resource adequacy, the natural diurnal price variations would become more stable. Introducing a floor price would introduce rigidity into the system and may not ensure the reliable operation of the grid, it said.
In response, PXIL highlighted that the eligible entities participating in the HP-TAM segment would be the same as those eligible for the HP-DAM segment. To maintain consistency and equity in market transactions, PXIL proposed that no floor price should be implemented to introduce high-price bilateral market contracts in the contingency and TAM segments.
Eligibility of Seller
GRID-INDIA asserted that relying on market data and information gathered from various power generating stations, it had proposed permitting a broader range of entities to participate in the HP-DAM segment through a transparent and non-discriminatory framework.
Meanwhile, PXIL said entities eligible to submit offers in the HP-TAM segment should be determined based on data provided by CERC, CEA, and GRID-INDIA, allowing for the exclusive inclusion of such entities in the HP-TAM segment. Additionally, PXIL suggested that the Commission could consider allowing generators not initially identified for HP-DAM and HP-TAM to approach the Commission for potential inclusion in these segments, contingent on specific considerations.
Schedule of HP-TAM Contract
GRID-INDIA also stated that in case of unit tripping of unit size 100 MW or more, revision of the short-term open access schedule is possible. Accordingly, suitable provisions may be put in place in the contract.
PXIL said that the power exchange will settle the transaction based on the revised schedule provided by the Regional Load Despatch Center on submission of the application for revision by the generator, electricity trader, or any other agency selling power from the unit of the generating station, in case of a forced outage of a unit of the generating station
Commission’s Analysis
The Commission noted that it had approved the introduction of the HP-DAM on PXIL’s PRATAY platform through its order dated April 11, 2023.
Later, on July 24, 2023, the Commission had granted approval to the Hindustan Power Exchange for the introduction of HP-TAM and HP-Contingency contracts.
HP-DAM and Contingency Contracts
The Commission endorsed implementing HP contracts, including daily, weekly, and monthly options, with predefined time blocks that will be communicated to market participants well in advance. Additionally, the Commission authorized the initiation of one-sided contracts by buyers through a reverse auction process. It also approved the introduction of High Price Day-Ahead contingency contracts and High Price Intra-day contingency contracts.
Eligible Entities
The Commission approved the inclusion of gas-based power plants utilizing imported regasified liquefied natural gas and naphtha, imported coal-based power plants using imported coal, as well as battery energy storage systems (BESS) to participate in the high-price bilateral market segment, encompassing TAM and contingency contracts. This decision was made to ensure uniformity across various market segments.
It also said all entities eligible for power procurement through open access would also be eligible to partake as buyers in the high-price bilateral segment.
Price Discovery Mechanism
The central regulator endorsed the adoption of a uniform price step auction as the matching methodology for price determination in the case of high-price daily, weekly, and monthly contracts. This aligns with the existing approach utilized in conventional TAM contracts. It directed PXIL to implement an open auction format for the uniform price step auction to allow participants to make informed decisions by observing buy and sell bids submitted by anonymous participants.
While it approved the reverse auction methodology as the price determination matching method for any-day single-sided contracts initiated by buyers, it did not endorse the proposed any-day single-sided contracts initiated by sellers through forward auction. This was deemed inconsistent with the goal of efficient price discovery.
CERC added that since the continuous matching methodology proposed for high-price Day-Ahead contingency contracts and Intra Day contingency contracts is the same as that of the methodology followed in the existing contingency and intraday contracts and green contingency and intraday contracts, it was approving the petitioner’s proposal.
Floor and Forbearance Price
Consistent with the floor and forbearance price structure established for the HP-DAM, the Commission specified that the floor price for the high-price bilateral market segment, encompassing TAM and contingency contracts, would be set at ₹0/kWh, while the upper price limit would be capped at ₹20 (~$0.241)/kWh.
Timelines for Bidding and Delivery Duration
The Commission approved the proposed HP-TAM contracts for a maximum of three months, considering the month the transaction is made as the zero month. Accordingly, the approved delivery duration for these contracts (for the pre-specified time blocks notified to the market participants well in advance) is as follows:
<ul>
<li>T+2 to T+90 days for daily contracts</li>
<li>TW+1 to TW+12 for weekly contracts</li>
<li>TM+1 to TM+3 months for monthly contracts</li>
<li>T+2 to T+90 days for any-day single-sided contracts for user-defined days and time blocks</li>
</ul>
T denotes the zero-day of trading, TW denotes the zero week of trading, and TM denotes the zero month of trading, and physical delivery of electricity starts on a day more than one day ahead.
Regarding PXIL&#8217;s proposal to extend the tenure of high-price bilateral segment contracts within TAM up to 11 months through the implementation of T-GNA provisions, the Commission took note of the fact that longer-duration contracts, specifically those lasting up to three months, have not yet generated sufficient trading activity on the petitioner&#8217;s platform.
In light of this, the Commission said it will initially consider contracts with a maximum duration of three months.
It also directed that timelines and delivery mechanisms for high-price Day Ahead Contingency and Intraday Contracts shall be on similar lines to the conventional and green power in the contingency segment.
NTSD Contracts
Consistent with the stipulated terms of the non-transferable specific delivery (NTSD) contracts, the Commission directed that high-price monthly contracts may be terminated or reduced without transferring positions in cases where transmission system constraints or force majeure events occur. However, these actions will require validation from the system operator and adherence to PXIL&#8217;s default mechanism.
Renewable Purchase and Energy Storage Obligation
Regarding PXIL&#8217;s proposal to instruct GRID-INDIA to furnish information concerning battery energy storage systems (BESS) that meet the criteria as eligible entities, thereby allowing buyers to meet their energy storage obligations through separate contracts within the high-price bilateral market, the Commission acknowledged that this matter was beyond the scope of the current petition.
It directed that all other features of the high-price bilateral market segment, including TAM and contingency contracts, would be similar to the conventional and green power segment.
Further, the Commission directed PXIL to schedule these high-price contracts initiated by the buyer on the first available day following the transaction day and to abide by the following conditions strictly:
<ul>
<li>The contracts are settled only by physical delivery without netting</li>
<li>The rights and obligations of contract parties cannot be transferred if the contract is not executed, either entirely or partially, by any means, leading to the absence of actual electricity delivery as specified in the contract or full payment for it</li>
<li>No circular trading shall be allowed, and the rights and liabilities of parties to the specific delivery contracts will not be transferred or rolled over by any other means</li>
<li>The trading will be done only by authorized grid-connected entities or trading licensees on behalf of grid-connected entities as participants</li>
<li>The contracts may be canceled or shortened due to transmission system limitations or other technical factors, with no transfer of positions allowed. However, once a contract is canceled, it cannot be reinstated or extended in any way to continue the same transaction</li>
</ul>
The capacity offered as a sell bid in a power exchange under the high-price Daily, Weekly, Monthly, and Any day single-sided contracts initiated by the buyer from a resource in the same time block will be separate and non-overlapping.
In January this year, CERC <a href="https://www.mercomindia.com/cerc-hydropower-contracts-green-term-ahead-market-2" target="_blank" rel="noopener">approved</a> Hindustan Power Exchange’s plea for introducing hydropower contracts in the GTAM beyond T + 11 days. The Commission directed HPX to incorporate the appropriate provisions in its by-laws and business rules and submit them to it within two weeks.
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CERC Approves High Price Bilateral Market Segment on PXIL

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					</table>The Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/" target="_blank" rel="noopener">CERC</a>) has allowed Hindustan Power Exchange (<a href="https://www.hpxindia.com/" target="_blank" rel="noopener">HPX</a>) to introduce High Price contracts in the High Price Day Ahead Market (HP-DAM), High Price Term Ahead Market (HP-TAM), and High Price Contingency Contracts (HP-Contingency) segments.
The Commission, however, rejected the proposal for introducing HP-Day Ahead Contingency and HP-Intraday Contracts for hydropower generators.
Background
The Commission granted registration to HPX in 2021, allowing it to establish and operate a power exchange. It has since provided services in the  Contingency, Green Contingency Contracts, Renewable Energy Certificates, Integrated Day Ahead Market, and Real Time Market segments.
HPX filed a petition seeking the Commission&#8217;s approval to introduce High Price contracts in HP-DAM, HP-TAM, and HP-Contingency.
It had proposed the introduction of HP-TAM and HP-Contingency contracts alongside HP-DAM to ensure a level playing field and flexibility for market participants. It had suggested a floor price of ₹12 (~$0.15)/kWh for the High Price Market Segment to facilitate trading by high variable cost generators.
HPX had also requested permission to include a forbearance price in the contracts to accommodate its software&#8217;s matching mechanism effectively.
The HP-DAM contract specifications included collective transactions on a day-ahead basis, with eligible entities who are high-price sellers and are approved by the Commission. The price discovery and matching methodology was to follow the double-sided closed bidding process.
The HP-TAM contract proposals included daily, weekly, monthly, and any-day single-sided contracts.
The HP-Contingency includes day ahead and intra-day contracts for hydropower generators. Eligible entities will be high-price sellers approved by the Commission, and price discovery will follow continuous matching.
HPX proposed risk management mechanisms, pay-in and pay-out procedures, and default penalty/ for each contract type.
CERC approved HPX’s request to introduce high-price contracts in the HP-DAM, HP-TAM, and HP-Contingency. HPX was directed to serve a copy of the petition to the Grid Controller of India (Grid-India) and invite comments from stakeholders and the public through its website.
Grid-India provided comments, including suggestions for the eligibility of sellers in HP-DAM and concerns about introducing a floor price, stating it may not be in the interest of reliable grid operation.
The stakeholders&#8217; comments were positive, expressing support for HP-TAM and HP-Contingency contracts, providing additional avenues for trading power and fostering competition in the power market. Some stakeholders suggested reducing the additional margin for sellers extensively trading on the power exchange.
Commission’s Analysis
The contract specifications for HP-DAM were approved, including double-sided closed bidding and uniform market clearing price mechanisms, with a single bidding window from 10 am to 12 noon. The market clearing will occur sequentially, with GDAM cleared first, followed by DAM and HP-DAM. Participants will have the option to transfer unselected bids from DAM to HP-DAM with different prices specified.
For HP-TAM and HP-Contingency contracts, eligibility is granted to specific categories of high-cost generators, subject to periodic review by CERC. All entities eligible for power procurement through open access are eligible as buyers in HP-DAM. The process of standing clearance for eligible sellers was outlined, along with the need to specify the source of power in the clearance.
The Commission also directed HPX to include the collection of an initial margin at the time of bidding, which will be 5% of the order value for HP-Daily and HP-Weekly Contracts and 1% of the order value for HP-Monthly Contracts.
For HP-Any day single-sided contracts, sellers must provide an initial margin at the rate of ₹30,000 (~$365)/MW/month or part thereof. The Exchange will be allowed to collect an &#8216;additional margin&#8217; before the scheduling application is made to the Load Dispatch Centre.
The additional margin will vary based on the contract duration: 50% for contracts up to 7 days, 25% for contracts up to 15 days, and 20% for contracts beyond 15 days. In case of default, the collected margins will be utilized to compensate the counterparty. The margins will be collected in both cash and non-cash forms.
Regarding pricing, a floor price of zero was allowed for HP-DAM to avoid negative impacts on the renewable energy integration program. The forbearance price for HP-DAM was set at ₹20 (~0.24)/kWh until further orders.
The HP-TAM and HP-Contingency contracts aim to ensure a level playing field and improve competition in the power market. Introducing high-price market segments is consequential to the Commission&#8217;s introduction of price caps.
HP-TAM contracts will include daily, weekly, monthly, and any-day(s) single-sided contracts. The eligible high-cost generators for participation will be gas-based power plants using imported RLNG and naphtha, imported coal-based power plants using imported coal, and battery energy storage systems. The price discovery mechanism for HP-TAM contracts will include uniform price step auction and reverse auction.
HP-Contingency contracts will include High Price Day Ahead Contingency Contracts and High Price Intraday Contingency Contracts. The eligible entities for HP-Contingency contracts will be the same as for HP-DAM and HP-TAM. The contracts will have a floor price of zero and a forbearance price of ₹20 (~0.24)/kWh.
The Commission approved a minimum volume quotation equivalent to 1 MW in HP-TAM and HP-Contingency contracts.
The proposal for introducing HP-Day Ahead Contingency and HP-Intraday Contracts for hydropower generators was not approved by the Commission as it deemed the proposal did not seem to fulfill the requirement of having a separate high-price market segment.
The Commission also directed HPX to specify the penalty fines and penalties in the contract specifications and business rules to ensure transparency in risk management and informed decision-making for the market participants.
Earlier this year, the Commission <a href="https://www.mercomindia.com/cerc-hydropower-contracts-green-term-ahead-market-2" target="_blank" rel="noopener">approved</a> HPX&#8217;s plea for introducing hydropower contracts in the Green Term-Ahead Market beyond T + 11 days.
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CERC Allows HPX to Start High Price Contracts in Three Segments

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					</table>The Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/" target="_blank" rel="noopener">CERC</a>) has issued regulations to limit frequency fluctuations within the operating band in the interest of grid security.
The regulator has set the normal rate of charges for deviation for a given time block.
This rate will be determined by taking the higher of two weighted averages: the weighted average clearing price (ACP) of the day ahead market segments of all power exchanges for that time block, or the weighted average ACP of the real-time market segments of all power exchanges for that time block.
However, this rate will not exceed ₹12 (~$0.15)/ kWh until further notice.
In February, the CERC had hiked monetary incentives for both generators and procurers to maintain the grid frequency in the safe range of 49.95-50.05 Hz.
The grid frequency had <a href="https://www.mercomindia.com/explainer-why-new-regulations-made-grid-unstable" target="_blank" rel="noopener">deviated </a><a href="https://mercomindia.com/explainer-why-new-regulations-made-grid-unstable/" target="_blank" rel="noopener">dangerously</a> away from the acceptable range of 49.90 -50.05 Hz. It oscillated between 50.5 Hz and 49.41 Hz on December 20.
The order further approves the proposal to introduce High-Price Day Ahead Market (HP-DAM) in the Integrated Day Ahead Market (I-DAM) segment to facilitate the participation of high variable cost generators.
The CERC reserved the order on a similar proposal to introduce HP-DAM for Power Exchange India. The Commission has directed all power exchanges to redesign their bidding software to facilitate members&#8217; ability to quote the price of up to ₹10 (~$0.12)/kWh for all contracts and up to ₹20 (~$0.24)/kWh in the HP-DAM segment.
Modifying its order of February 6, 2023, it directed that the normal rate of charge for deviation will be equal to the higher of the weighted average ACP of the day ahead market segments of all the power exchanges or the weighted average ACP of the real-time market segments of all the power exchanges for a time block.
However, for a seller whose bid is cleared in the HP-DAM, the normal rate of deviation charges will be equal to the highest of the weighted average ACP of the HP-DAM market segments or the weighted average ACP of the day ahead market segments or the weighted average ACP of the real-time market segments of all the power exchanges.
The directions will come into effect from midnight of April 10, 2023.
Recently, the Commission <a href="https://cms.mercomindia.com/changes-power-exchanges-bidding-software/" target="_blank" rel="noopener">directed</a> all power exchanges to redesign their bidding software to allow members to quote prices within a specified range for different types of contracts.
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Central Regulator Issues Measures to Reduce Grid Frequency Fluctuations

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					</table>The Union Government has launched a High Price Day-Ahead Market (HP-DAM) and surplus power portal (PUShP), aiming to ensure greater power availability during the peak demand season.
In August last year, the Ministry of Power had <a href="https://mercomindia.com/ministry-mulls-high-price-day-ahead-market-exchanges/" target="_blank" rel="noopener">proposed</a> the introduction of HP-DAM.
The ministry had <a href="https://mercomindia.com/cerc-orders-power-exchanges/" target="_blank" rel="noopener">implemented</a> a price cap of ₹12 (~$0.15)/kWh on electricity exchanges last year after noticing that prices on some days had reached up to ₹20 (~$0.24)/kWh. The cap was enforced from April 1, 2022, in both the Day-Ahead Market and Real-Time Market, and later across all segments from May 6, 2022 to prevent profiteering.
The cap helped to rationalize prices for buyers, especially since the cost of producing electricity using gas was high, at more than ₹12 (~$0.15)/kWh. This led to a situation where gas-based electricity generation could not be sold on the market.
Also, imported coal-based plants and renewable energy stored in battery-energy storage systems could not be called into action as the generation cost was high.
Due to an anticipated increase in demand this year, the scheduling of gas-based and imported coal-based plants will be necessary. As a result, a new segment called HP-DAM has been established to accommodate these generation systems, where the cost of generating power from gas, imported coal, and renewable energy with storage could exceed ₹12 (~$0.15)/kWh.
At the launch event, Union Power Minister R.K. Singh stated that the creation of HP-DAM was a crucial part of the overall strategy to maximize power capacity and provide power to consumers. Singh emphasized that electricity pricing within the HP-DAM would be closely monitored to prevent excessive charging.
He clarified that only those generating capacities whose cost of producing power exceeds ₹12 (~$0.15)/kWh would be permitted to operate within HP-DAM. Capacities whose production costs fall below ₹12 (~$0.15)/kWh  would be required to offer their power within the power exchange&#8217;s Integrated Day Ahead Market (I-DAM) with a price ceiling of ₹12 (~$0.15)/kWh.
The minister instructed the CEA and Grid Controller to ensure that HP-DAM prices are reasonable and to take appropriate action against any power producer charging exorbitant prices that surpass the production cost.
Distribution companies (DISCOMs) are obligated to pay fixed charges for long-term power purchase agreements, regardless of whether they schedule the power or not. The surplus power portal will allow DISCOMs to display their excess energy during specific block times, days, or months on the portal.
The new buyer will pay both the variable charge and the fixed cost determined by regulators. Once the power is reassigned, the original beneficiary loses the right to recall it, and the entire fixed-cost liability will be transferred to the new beneficiary.
The financial responsibility of the new buyer is limited to the quantity of temporarily allocated or transferred power. This will reduce the fixed cost burden on DISCOMs and ensure that all available generation capacity is utilized.
Recently, the <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a> <a href="https://mercomindia.com/government-strategy-meet-peak-power-demand/" target="_blank" rel="noopener">announced</a> a comprehensive strategy to ensure power availability during the summer.

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