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India Power Market Coupling Faces Major Hurdles
27 Jul
Summary
- Grid India cited unresolved issues: scope, software, settlement, and failure risk.
- Supreme Court hearing scheduled on power exchange coupling dispute.
- Market coupling aims for unified price discovery across power exchanges.
India's ambitious plan to couple its power exchanges is facing potential delays extending beyond current regulatory timelines. Grid India has raised several significant concerns, including issues with scope, software robustness, settlement processes, cost allocation, and the risk of a single point of failure. These unresolved points, highlighted by the Indian Energy Exchange (IEX) in an analyst meet, suggest a prolonged implementation period.
The matter has escalated to the Supreme Court, which is scheduled to hear IEX's appeal against a prior tribunal order. This legal challenge stems from the Appellate Tribunal for Electricity's February order, which deemed the Central Electricity Regulatory Commission's (CERC) July 2025 coupling directive invalid without IEX's consent. Final regulations from CERC are still pending, even after a public hearing in June.
Even if regulations are finalized, Grid India would require at least six months for developing necessary clearing technology and operating procedures. IEX also reserves the right to pursue further legal avenues. The integration aims to establish common price discovery across different power exchanges, a move initially targeted for the Day-Ahead Market (DAM) from January 2026.
Concerns also loom over the operational viability of market coupling in the Real-Time Market (RTM), particularly if CERC reduces the gate-closure period. The RTM is gaining prominence due to the expansion of renewable energy capacity and the need for distribution companies to manage intra-day supply variations. IEX's RTM volumes have seen substantial growth, rising from 21% in FY22 to 39% in FY26 and projected to reach 43% in Q1FY27, while DAM's share has declined.
Financially, IEX reported robust performance in Q1FY27, with total income up 11.4% to ₹1.56 billion, EBITDA increasing 14.3% to ₹1.30 billion, and profit after tax growing 12.1% to ₹1.27 billion. The exchange is also exploring opportunities in battery storage and anticipates the launch of its coal exchange within a year, projecting significant migration of trade volumes to exchanges.
