The Central Electricity Regulatory Commission (CERC) has released a draft notification titled the “Power Market (Second Amendment) Regulations, 2026,” proposing a significant transformation in the way electricity prices are determined across India. At the core of this reform is the introduction of “Market Coupling,” a mechanism aimed at integrating multiple power exchanges into a unified system for more efficient price discovery.
A key highlight of the draft is the appointment of Grid Controller of India Limited (Grid India) as the designated Market Coupling Operator (MCO). Under this role, Grid India will be responsible for centrally determining electricity prices, replacing the current system where individual power exchanges independently carry out price discovery. To handle these responsibilities, Grid India is required to establish a dedicated internal unit that will manage market coupling operations.
The proposed system introduces a structured and standardized process for electricity trading. All power exchanges will first collect buy and sell bids from market participants using a uniform bidding format. These bids, once validated and anonymized, will then be securely transmitted to the MCO. Grid India, acting as the MCO, will aggregate bids from across exchanges and determine a single market-clearing price. This centralized approach is designed to maximize “economic surplus,” ensuring optimal benefits for both buyers and sellers by identifying the most efficient price point.
The new regulations are set to apply initially to the Day-Ahead Market (DAM) and the Real-Time Market (RTM), which are key segments of India’s short-term electricity trading framework. However, the implementation will be phased, with CERC retaining the authority to notify different commencement dates for various market segments. Until the new system becomes operational, existing power exchanges will continue to function under the current decentralized price discovery mechanism.
To operationalize market coupling, Grid India has been tasked with developing a detailed Power Market Coupling Procedure (PMCP). This document will outline the technical, operational, and institutional framework required for implementation. It will include specifics on bidding processes, algorithm design for price discovery, congestion management, and coordination with the National Load Despatch Centre. The PMCP must be prepared and submitted for CERC approval within six months.
In terms of regulatory oversight, the draft amendment extends several compliance and transparency requirements to Grid India, similar to those applicable to power exchanges. This ensures accountability in the centralized system and maintains market integrity. Through these reforms, CERC aims to create a more integrated, transparent, and competitive electricity market in India, ultimately leading to better price efficiency and improved resource allocation for consumers.
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