CERC Approves Rollout of Market Coupling for Power Exchanges

The Central Electricity Regulatory Commission (CERC) has announced the phased implementation of market coupling in India’s power sector, beginning with the Day-Ahead Market (DAM), which is scheduled to go live by January 2026. The decision is a significant move toward price discovery uniformity and optimizing electricity dispatch across the country.

The Commission’s decision builds upon the findings of a shadow pilot project carried out between December 2024 and March 2025. The pilot was initiated as per the directions issued in February 2024 through a petition, where CERC tasked Grid Controller of India (Grid-India) with testing the coupling of various market segments, including the DAM, Real-Time Market (RTM), and a combined model of RTM with Security Constrained Economic Dispatch (SCED). The pilot was run in a D+1 format using historical data spanning nearly 29 months and involved close coordination with all three power exchanges.

The results, as reported by Grid-India in its feedback report dated June 30, 2025, demonstrated clear system-wide benefits. DAM coupling showed a INR 38 crore increase in overall welfare, with a 52 million unit rise in volume cleared, albeit with negligible price impact. RTM coupling recorded modest gains with INR 72 lakh in additional welfare and 1.54 MU more power traded. The RTM-SCED coupling scenario stood out with estimated net daily savings of INR 1.4 crore, although it also showed a marginal increase in average cost by INR 1/MWh. The pilot also confirmed reduced volatility in the Average Clearing Price (ACP) under the coupled scenario.

In light of these outcomes, the Commission has decided to implement DAM coupling first, using a rotational 'round-robin' structure wherein all three power exchanges will act as the Market Coupling Operator (MCO) in turn. Grid-India will act as the fourth MCO for backup and audit functions to ensure transparency and reliability. This step is expected to boost market confidence and strengthen the operational integrity of India’s electricity markets.

However, CERC has opted to postpone the coupling of RTM due to the tight window for bid submissions and clearing in real-time operations. The Commission intends to gain operational experience from the DAM implementation before considering RTM coupling. Regarding the more complex RTM-SCED integration, CERC acknowledged the technical and regulatory challenges flagged by Grid-India and suggested that the model will require further study, stakeholder consultation, and potentially new regulations.

To expand the scope of market integration, the Commission has also instructed Grid-India to initiate a shadow pilot for the Term-Ahead Market (TAM), including contingency contracts. The necessary software for TAM coupling is to be developed and deployed, after which a three-month pilot run will be conducted. The outcomes are to be reported back to the Commission through a detailed feedback report.

The Commission has directed all power exchanges to cooperate by sharing relevant data and technical inputs with both CERC staff and Grid-India to facilitate the smooth rollout of market coupling. Furthermore, CERC has asked its internal staff to begin consultations with stakeholders on the procedural and regulatory changes needed for full implementation. These may include harmonising bid formats, refining clearing algorithms, and addressing governance matters related to the appointment and functioning of MCOs.

CERC’s regulatory framework for market coupling is based on the Power Market Regulations, 2021, particularly Regulations 37 to 39, which define the objectives, structure, and responsibilities involved. These include achieving uniform price discovery, maximising economic surplus for buyers and sellers, and ensuring optimal utilisation of the transmission network.

With this move, CERC has signaled its intent to modernise and rationalise India’s electricity markets. The successful completion of the shadow pilot has now transitioned into a concrete policy path, one that will require collaboration among exchanges, system operators, and market participants to deliver a more efficient and transparent power market ecosystem.