India’s electricity market is moving toward a major structural reform with the regulator pushing for market coupling. At its core, market coupling aims to replace multiple electricity prices with one unified national price for each trading period, explains Saurav Anand
l Why CERC wants market coupling
THE PUSH FOR market coupling is being led by the Central Electricity Regulatory Commission, which argues that the existing system is fragmented and overly dependent on a single dominant exchange. When liquidity concentrates on one platform, that exchange gains pricing power while smaller exchanges struggle to compete. Pooling bids is expected to make price discovery more efficient, transparent and reflective of system-wide demand and supply.A unified market is also expected to better manage renewable energy integration. As solar and wind capacity grows, supply becomes more variable. A larger combined pool can absorb these fluctuations better.
l How is power traded today?
ELECTRICITY FOR SHORT-TERM delivery in India is traded on several exchanges. The largest platform is Indian Energy Exchange, which dominates the day-ahead and the real-time markets. Smaller competitors include Power Exchange of India and Hindus-tan Power Exchange. Each exchange operates independently. Buyers and sellers place bids on their chosen plat-form, and prices are discovered separately based on demand and supply on that exchange. This means electricity for the same delivery hour can have slightly different prices across exchanges. Over time, most traders gravitate toward the market with the highest liquidity. That’s what has happened in India, with IEX commanding 84-85% of volumes in key segments.
l How market coupling works
IN MARKET COUPLING, instead of each exchange discovering prices separately, a central clearing mechanism will collect bids from all platforms and determine a single market-clearing price for every time block. Exchanges will continue to operate and accept orders, but final price discovery will be centralised. In effect, electricity across India will trade at one common price per hour rather than multiple exchange-specific prices.This model is used in European electricity markets to integrate supply and demand across regions.
l Why does the tribunal ruling matter?
IEX HAD CHALLENGED the regulator’s plan, arguing that coupling could distort competition and undermine exchange-based trading. The Appellate Tribunal rejected these arguments, removing the biggest legal hurdle. With this ruling, the CERC can move ahead with finalising rules and timelines.The decision triggered renewed concerns in equity markets about IEX’s future dominance.
l Why IEX shares reacted sharply
IEX’s dominance comes from liquidity. Since most buyers and sellers trade there, others follow. Under market coupling, this advantage weakens because all bids will be pooled centrally. Participants will no longer need to use the largest exchange to access the best price.Analysts estimate IEX’s market share could gradually fall to 60–70% as rival platforms gain easier access to volumes. When coupling was first proposed in mid-2025, IEX shares plunged sharply on fears of structural revenue pressure.
l Will electricity become cheaper?
NOT NECESSARILY CHEAPER in absolute terms, but more efficiently priced.Pooling all demand and supply reduces distortions caused by thin liquidity and may smooth volatility. Supporters say it improves transparency and reflects real-time system conditions better.Critics warn that centralised price discovery could reduce competition among exchanges and concentrate operational risk in one clearing entity. The final impact will depend on how the system is designed.
l Why is this happening now?
INDIA’S POWER SYSTEM is evolving rapidly. Renewable energy capacity is rising, short-term trading volumes are expanding and real-time balancing is becoming critical.Regulators believe the fragmented pricing model is no longer suited to a more complex grid. Market coupling is seen as the next step toward a mature, integrated electricity market.
l The bigger shift
MARKET COUPLING MARKS a move from exchange-led pricing to system-led pricing. Power trading exchanges will increasingly compete on technology, settlement services and analytics rather than on liquidity dominance.
For IEX, it does not mean the end of its business, but it does signal the end of near-monopoly conditions. For India’s power sector, it represents a transition toward a more transparent and efficient pricing framework.
In simple terms, India is moving from several separate power markets to one unified national market — many platforms, but one common price, a shift that could permanently reshape electricity trading in
the country.