The Central Electricity Regulatory Commission (CERC) has issued draft regulations to move India to a single, unified electricity price through a system called “market coupling”. Its impact could ripple across power bills, trading platforms, and the entire energy ecosystem, writes Saurav Anand.
What is market coupling?
In India’s power market today, the same unit of electricity can trade at different prices on different exchanges, creating inefficiencies, confusion and missed opportunities. The three power exchanges — Indian Energy Exchange, Power Exchange India and Hindustan Power Exchange of India— operate independently. Each collects bids and determines prices separately, which often leads to multiple prices for the same electricity at the same time.
Market coupling changes this completely. The CERC has proposed that all buy and sell bids across all three exchanges will be pooled together and cleared centrally. The result will be a single, uniform market-clearing price. The idea is straightforward: power should flow from the lowest-cost generator to the highest-value consumer. This ensures that the system works efficiently and avoids fragmentation.
For example, if one exchange is selling electricity at Rs 5 per unit and another at Rs 6, the current system allows this mismatch to continue. Under market coupling, bids are combined, and a single price, say, Rs 5.5 is discovered. This increases traded volumes and ensures more efficient use of cheaper power.
Who will decide electricity prices now?
One of the biggest shifts is in who controls the prices. The Draft (Power Market) (Second Amendment) Regulations, 2026, issued on April 17, proposes that Grid Controller of India (Grid India) will act as the market coupling operator (MCO). This means power exchanges will no longer determine prices. Instead, they will collect bids in a standardised format and send them to Grid India. The MCO will then aggregate all bids and calculate the price.
As per the draft, Grid India will “operate and manage market coupling” and will be required to establish a dedicated internal cell for this purpose. The system will also require a Power Market Coupling Procedure (PMCP) to be developed within six months. In effect, India is moving from a decentralised model to a centralised price discovery mechanism.
How will prices be calculated?
Power prices will be determined using the principle of maximising “economic surplus”— a concept that takes into account the benefits accruing to both buyers as well as sellers. In simple terms, the system will try to ensure that electricity is supplied in the most efficient way possible, maximising total gains across the market.
The draft also introduces a Uniform Market Clearing Price across exchanges. This means that regardless of which exchange a participant trades on, it will get the same price. To make this work, the power exchanges will have to adopt a mandatory standardised bid format and share data securely with the MCO. In effect, the price discovery mechanism is transferred to the MCO.
What if the grid cannot support one price?
Electricity markets can be constrained by physical infrastructure. Transmission bottlenecks can prevent power from moving freely across regions. To address this, the draft allows for “market splitting”. If there’s congestion in the grid, prices can differ across regions.
For instance, a surplus state like Rajasthan may have power priced at Rs 4 per unit, while a deficit region like Delhi may see price of Rs 7 per unit due to limited transmission capacity. This divergence reflects real constraints and signals where grid investments are needed.
The new system ensures that while the goal is a single national price, it can adapt when physical limitations come into play.
Who gains & who loses in this system
For distribution companies and consumers, the move could mean more transparent and potentially lower prices, as they gain access to the cheapest available electricity across the country. Generators stand to benefit from a level-playing field. Efficient producers are likely to dispatch power more frequently, improving utilisation.
Traders may see reduced arbitrage opportunities, as price differences across exchanges disappear. However, this could push them towards more sophisticated trading strategies. Power exchanges face the biggest disruption. Their core function, price discovery will no longer define their business. As the CERC draft makes clear, exchanges “will continue to collect bids” but “will not determine the prices post-coupling”.
This could lead to margin pressures, forcing exchanges to reinvent themselves as platforms offering analytics, risk management tools and new market products. The rollout will be phased, starting with the Day-Ahead Market and Real-Time Market, with scope to extend to other segments. Grid India will develop the operational framework within six months, while stakeholder feedback has been invited until May 16, 2026.
In essence, the reform marks a shift from “many markets, many prices” to “one market, one price” — unless the grid itself demands otherwise.