Power market coupling may be years away as Grid India flags risks

“APTEL (Feb-2026) held that CERC’s July-2025 coupling order was invalid absent IEX consent, and the matter is now before the Supreme Court. Grid India has itself raised unresolved concerns on scope, software robustness, single-point-of-failure and cost allocation – implementation timeline pushed out, in management’s view potentially years away,” Axis Capital said in a report.

It noted that IEX management does not expect any material loss in DAM market share even if market coupling is implemented, citing its 18-year customer relationships and API stickiness. The management also highlighted that implementing market coupling in the RTM may not be operationally viable.

“IEX, at its Analyst Meet, flagged that market coupling (MC) uncertainty persists – final regulations could face legal challenges, and Grid India may need time to implement even when finalized,” IIFL capital said in an another report.

The issue has returned to the spotlight as IEX’s appeal against the February 13 Appellate Tribunal for Electricity order is pending before the Supreme Court, with the matter listed for hearing this week. CERC completed a public hearing in June, but final regulations are awaited. Even after notification, Grid India may require at least six months to build clearing technology and operating procedures, while IEX could pursue fresh legal options.

Market coupling seeks common price discovery across power exchanges. CERC’s July 2025 order had directed coupling of the Day-Ahead Market from January 2026, but APTEL held that it could not proceed without a formal regulatory framework. Grid India has sought clarity on whether the mechanism will cover only DAM or also green and high-price segments, while flagging unaudited pilot software, single point of failure complex bids and inter-exchange disputes.

IEX management said coupling could be operationally difficult in the Real-Time Market, particularly if CERC shortens the gate-closure period from 75 minutes to 50 minutes. RTM is becoming increasingly important as renewable capacity expands and distribution companies manage intra-day supply variations.

RTM’s share of IEX volumes rose from 21% in FY22 to 39% in FY26 and 43% in Q1FY27, while DAM’s share fell from 68% to 44% and 36%, respectively. RTM volumes grew 41% in FY26 and 23.5% in Q1FY27, with management projecting 25-30% annual growth and the segment potentially overtaking DAM.

More than 70% of integrated DAM cleared volumes are already routed through IEX’s bidding application programming interface, indicating deep customer integration.

In Q1FY27, IEX’s total income rose 11.4% to ₹1.56 billion, EBITDA increased 14.3% to ₹1.30 billion and profit after tax grew 12.1% to ₹1.27 billion. Electricity volumes climbed 15.9% to 37.53 billion units, though overall volumes rose only 2.3% to 38.51 billion units after renewable energy certificate volumes fell 81.4%.

The exchange is also betting on battery storage. FY26 power-price arbitrage averaged ₹4.81 per unit-cycle against a cost below ₹3.50 for two-cycle operations. Management expects favourable economics for four to five years as electricity demand grows about 6% annually.

India’s peak demand touched a record 270.8 GW in May, while Q1FY27 consumption rose 8.8% to 485.4 billion units. Installed capacity reached 533 GW after a 58-GW FY26 addition, including 275 GW of renewables.

IEX expects its coal exchange to begin trading within a year. Around 120 million tonnes now sold through e-auctions and marketplaces will migrate to exchanges within six months of launch, with the market projected at 250-300 million tonnes by 2035.

Exchange-based trade accounts for only 8-9% of national electricity consumption. IEX sees the addressable share rising to about 25% over five to six years as bilateral, banking and long-term transactions shift to exchanges.

Both Axis Capital and IIFL capital services have upgraded the stock to an ADD, with long term target price of Rs 135/share and Rs 140/share respectively.