The Central Electricity Regulatory Commission (CERC) has issued a directive to initiate the phased implementation of market coupling for the country’s power exchanges. The first phase will focus on the Day-Ahead Market (DAM), with a target of rolling out the coupling mechanism by January 2026. This decision is based on the findings of a shadow pilot run and a feedback report submitted by the Grid Controller of India (Grid-India).
The Commission’s decision follows its initial order dated February 6, 2024, which had directed Grid-India to implement a shadow pilot on power system and cost optimization through market coupling. After addressing concerns raised by Grid-India on the initial timelines and the need for a uniform bid structure, CERC constituted a committee to oversee the pilot’s implementation.
Key Findings from the Shadow Pilot
Grid-India’s “Feedback Report on D+1 run of Shadow Pilot,” covering the period from December 1, 2024, to March 31, 2025, presented encouraging results for coupling different market segments:
- DAM Coupling: The coupling of the Day-Ahead Market (DAM) of the power exchanges resulted in an increase in overall welfare by ₹38 crore (0.3%) and a rise in the overall cleared volume by 52 MU (0.2%).
- RTM Coupling: For the Real-Time Market (RTM), the coupling led to an increase in overall welfare of ₹72 lakh (0.01%) and a cleared volume increase of 1.54 MU (0.01%).
- RTM-SCED Coupling: The coupling of RTM with the Security Constrained Economic Despatch (SCED) mechanism showed an improvement in overall net savings of ₹1.4 crore per day.
Implementation Plan and Future Phases
Based on these results, CERC has decided to proceed with a phased implementation:
- Phase 1 (DAM Coupling): The coupling of the Day-Ahead Market will be implemented in a round-robin mode by January 2026. This model will have power exchanges acting as the Market Coupling Operator (MCO) on a rotational basis, with Grid-India serving as a backup and for audit purposes. This arrangement is intended to enhance the efficiency of power exchanges and build confidence among market participants.
- Future Market Segments: The Commission has decided to consider the coupling of the Real-Time Market at a later stage, after gaining operational experience from the DAM coupling. Additionally, CERC has directed Grid-India to develop software for a new shadow pilot to examine the feasibility of coupling the Term-Ahead Market (TAM).
The CERC’s decision aligns with the objectives of market coupling outlined in its 2021 regulations, which include discovering a uniform market clearing price, optimizing transmission infrastructure, and maximizing economic surplus. The staff of the Commission has been directed to begin the necessary consultative process with Grid-India and the power exchanges to analyze the operational and procedural aspects for implementing the DAM coupling and to propose the required regulatory amendments.