The Central Electricity Regulatory Commission’s proposed implementation of market coupling in Day Ahead Market segment of power exchanges from January 2026 will usher in little benefits for the power sector and is contrary to the findings of the pilot study conducted by Grid Controller of India, industry officials said on July 30.
The officials noted that marginal improvements do not offer a compelling rationale for implementing market coupling on a full scale, particularly in the absence of a detailed robustness and sensitivity analysis. They added that even the January 2026 timeline for implementation is ambitious.
“The results of the shadow pilot conducted by Grid-India released July 23rd 2025 do not indicate any significant benefits from market coupling. This is in line with the earlier CERC order dated 6th Feb 2024,” said an industry official. “In the Day-Ahead Market (DAM) segment, overall welfare increased by a negligible 0.3%, and overall volume cleared increased by only 0.2%. Similarly, in the Real-Time Market (RTM) segment, both overall welfare increase and increase in volume cleared saw an insignificant gain of 0.01%.”
Further, the increase of social welfare by Rs 38 crore in case of DAM coupling doesn’t mean that there will be saving of Rs 38 crore.
“Savings will be miniscule, if at all. The reported increase in social welfare of Rs 38 crore in DAM is theoretical, used for algorithmic modelling, and does not imply actual consumer savings,” the official added.
Another industry official said since CERC has itself stated that coupling doesn’t lead to significant price variation, it means that the commission’s stated objectives — uniform price discovery, optimal transmission utilisation, and economic surplus maximisation — are already being addressed under the current multi-exchange system.
“Introducing central market coupling mechanism risks adding complexity, delaying market operations, and duplicating functions, without resolving core challenges such as market liquidity, deepening of participation, or improving investor confidence,” the official said.
The officials added that while the idea has been presented as ‘market coupling’, the proposed design more closely resembles ‘exchange coupling’ with no precedence globally. Notably, there is no established example of coupling in the Real-Time Market internationally. Further, the proposal for rotational Market Coupling Operators among exchanges, with Grid-India as backup, is contrary to global practice and may lead to potential biases and audit-related complexities, they added.
Industry officials pointed out that while Grid-India had submitted a detailed report to CERC, the Commission’s order does not adequately reflect the comprehensive findings of that report. Instead, the CERC order selectively gives reference to only a few lines from Grid-India’s submission.
“For ensuring transparency and stakeholder confidence, the complete Grid-India report should be made publicly available to facilitate informed discussions and independent assessments of the recommendations. The current order suggests that market coupling is being introduced against the advice of Grid India,” one of the officials quoted above added.
Analysts tracking the power sector said that given further consultations with Grid-India and the power exchanges are pending, along with the need for necessary regulatory amendments, the proposed timeline for implementing market coupling by January 2026 seem ambitious.
“Implementation of power market coupling requires upgrading and integration of software, modification in infrastructure for compatibility, formation of data sharing protocol, and consensus on financial settlement mechanism and changes in relevant regulations. We believe the Jan’26 target for implementation of coupling is very ambitious, and implementation will not be possible before Dec’27,” leading domestic brokerage firm, JM Financial said in a note.
Analysts said that the introduction of coupling in power exchanges goes against the principle of open and competitive market mechanism, and such a precedent may trigger demand for a similar model in other sectors of the economy like stock exchanges and aviation. Regulatory control over core business operations raises concerns around market autonomy and may not align with the long-term interests of the sector or its stakeholders, they added.
“If applied elsewhere, this approach would imply merging competitive platforms like NSE and BSE or even Jio and Airtel — contradicting the principles of open markets. This will effectively kill innovation, service excellence and the incentive to launch new products,” said Ashish Kapur, Founder and CEO, Invest Shoppe.
Source: Press Release