The Indian government has granted approval for the implementation of market coupling in the electricity sector, which aims to establish uniform prices for power across multiple exchanges. The Ministry of Power has written to the Central Electricity Regulatory Commission (CERC), urging it to initiate the process of market coupling across the country’s power exchanges.
Market coupling involves aggregating and matching buy and sell bids from all power exchanges in India to determine a uniform market clearing price (MCP). This measure is expected to ensure quick access to power and eventually contribute to keeping power tariffs affordable in the long run.
Currently, the three power exchanges in India – Indian Energy Exchange Limited (IEX), Power Exchange India Limited (PXIL), and Hindustan Power Exchange Limited (HPX) – have different power prices or MCPs.
This move aligns with the government’s objective of transitioning India’s electricity trading from long-term (25 years) power purchase agreements (PPAs) to electricity markets or exchanges, as well as shorter PPAs spanning 12 to 15 years.
The CERC will now prepare a document on the implementation of market coupling, which will be followed by consultations with stakeholders. This development marks a significant step towards streamlining power pricing and trading in India’s electricity sector, fostering greater efficiency and promoting the use of exchanges for power procurement.