Power minister Manohar Lal will soon meet stakeholders to discuss fast-tracking the implementation of market coupling in the power exchanges.
Sources said that the minister has already had one round of consultations with the stakeholders on market coupling. Another round of consultations will happen soon.
“The minister will inform the stakeholders about the benefits that market coupling will bring to the table. While most stakeholders agree that it will enable better competition and bring down transaction costs, some point out that it can cause disruption in the market due to integration of various inputs across multiple exchanges,” said one of the sources.
The government has proposed market coupling of the three power exchanges—Indian Energy Exchange (IEX), Power Exchange of India (PXIL) and Hindustan Power Exchange (HPX)—in the country in order to determine a uniform market clearing price.
Market coupling is the process whereby collected bids from all power exchanges are matched, after taking into account all bid types, to discover a uniform market clearing price for the Day Ahead Market (DAM) or Real-Time Market (RTM) or any other market as notified by the Central Electricity Regulatory Commission (CERC), subject to market splitting.
Uniform market clearing price
Its objective is the discovery of uniform market clearing price for DAM or RTM or any other market as notified by the CERC, optimal use of transmission infrastructure and maximising economic surplus, after taking into account all bid types and thereby creating simultaneous buyer-seller surplus.
Globally, market coupling has been introduced to integrate two or more electricity markets or different geographies.
In 2023, the Central Electricity Regulatory Commission (CERC) floated a paper on implementing market coupling in the power sector, which aids in discovery of uniform prices, optimal use of transmission infrastructure and maximising economic surplus.
Among the key issues pointed out by the regulator includes whether current Indian power market scenario presents a “compelling” case for coupling, its impact on tech innovation as well as competition and whether there is a need for a third party market coupling operator (MCO).
While the power exchanges have the expertise to run the algorithms and handle different market scenarios, having a third-party MCO shall ensure more objective operation and will not have any conflict of interest. The third party could be the system operator or an explicitly formed entity, it said.