The Central Electricity Regulatory Commission’s (CERC) proposed implementation of market coupling in Day Ahead Market (DAM) segment of power exchanges from January 2026 may have little benefit for the power sector and is contrary to the findings of the pilot study conducted by Grid Controller of India, according to industry officials and analysts.
They said the marginal improvements do not offer a “compelling rationale” for implementing market coupling on a full scale, particularly in the absence of a detailed “robustness and sensitivity” analysis.
They added that even the January 2026 timeline for implementation would be challenging.
“The results of the shadow pilot conducted by Grid-India released in July 2025 do not indicate any significant benefits from market coupling. This is in line with the earlier CERC order dated 6th February 2024,” said an industry official
“In the DAM segment, overall welfare increased by a negligible 0.3%, and overall volume cleared increased by only 0.2%. Similarly, in the Real-Time Market (RTM) segment, both overall welfare increase and increase in volume cleared saw an insignificant gain of 0.01%,” the official said.
Further, the increase of social welfare by ₹38 crore in case of DAM coupling doesn’t mean that there will be saving of ₹38 crore, the official said.
“Savings will be miniscule, if at all. The reported increase in social welfare of ₹38 crore in DAM is theoretical, used for algorithmic modelling, and does not imply actual consumer savings,” the official added.
“Introducing central market coupling mechanism risks adding complexity, delaying market operations, and duplicating functions, without resolving core challenges such as market liquidity, deepening of participation, or improving investor confidence,” the official said.
According to industry officials while the idea has been presented as ‘market coupling’, the proposed design more closely resembles ‘exchange coupling’ with no precedence globally.
They pointed out that while Grid-India had submitted a detailed report to CERC, the Commission’s order does not adequately reflect the comprehensive findings of that report.
For ensuring transparency and stakeholder confidence, the complete Grid-India report should be made publicly available to facilitate informed discussions and independent assessments of the recommendations, they emphasised.
According to a report by JM Financial the benefits of market coupling are negligible.
“A shadow pilot study by Grid-India revealed that DAM coupling resulted in an overall welfare gain of just 0.3% in price and 0.2% in volume. The volume of electricity that could not be cleared as % to unconstrained cleared volume was just 0.10% in FY24,” JM Financial analysts said in the report.
“Anticipated benefits (price, volume, transmission) of market coupling are not explicitly evident in the Indian context,” they said.
According to them the implementation of power market coupling requires upgrading and integration of software, modification in infrastructure for compatibility, formation of data sharing protocol as well as consensus on financial settlement mechanism.
“We believe the January 2026 target for implementation of coupling is very ambitious, and implementation will not be possible before December 2027,” they said in the report.
“If applied elsewhere, this approach would imply merging competitive platforms like NSE and BSE or even Jio and Airtel — contradicting the principles of open markets. This will effectively kill innovation, service excellence and the incentive to launch new products,” said Ashish Kapur, CEO, Invest Shoppe, a boutique financial firm offering wealth management solutions.
Published – August 02, 2025 09:21 pm IST
