Indian Energy Exchange shares crash as CERC announces phased implementation of market coupling

The regulator also said that it would issue directions for exploring market coupling in other segments including real-time market and term-ahead market through shadow pilots and regulatory consultations

The apex power regulator, Central Electricity Regulatory Commission on Wednesday announced a phased implementation of market coupling for the Day-Ahead-Market effective January 2026, ending the dominance enjoyed by the Indian Energy Exchange (IEX), whose shares crashed over 30 per cent in response.

The shares of the exchange fell to a 52-week low of ₹135.49 intra-day, before settling nearly 28 per cent lower at ₹135.49 on the NSE.

Round-robin mode

In its suo-moto order, the CERC said it had decided to initiate the process for implementing market coupling in a phased manner, which included the implementation of the coupling of day-ahead market (DAM) of the power exchanges in a round-robin mode by early next year.

Under the round-robin mode, the power exchanges will act as the market coupling operator (MCO) on a rotational basis with Grid-India being the fourth MCO for backup and audit purposes.

The regulator also said that it would issue directions for exploring market coupling in other segments including real-time market and term-ahead market through shadow pilots and regulatory consultations.

What the CERC has done is bring in a centralised pricing mechanism in the power market, so that a single price will be used across all exchanges.

So far, each power exchange have set their own pricing based on trading demand and supply. There are two other power exchanges: Power Exchange India and Hindustan Power Exchange. But IEX is the largest with over 84 per cent market share and due to the higher liquidity, had better price discovery, and therefore, had a considerable edge over the other exchanges.

The CERC directive means that IEX would lose its control over price discovery with the other exchanges having access to the same pricing. It has over 90 per cent share in DAM and RTM, both of which are significant revenue contributors. With centralised price determination, the one element that made IEX indispensable in competitive price discovery will stand diluted. This may result in losing the trading advantage leading to lower transaction margins.

Shares of IEX fell because of apprehensions of loss in business.

“This regulatory development marks a proposed change in the market mechanism in Day-Ahead Market (DAM). The company is currently undertaking a detailed impact assessment of the implications of this regulatory change and will keep the stakeholders informed of any further developments,” IEX said in a statement.

“The move is a regulatory game-changer: it transfers price discovery from individual exchanges to a central clearing mechanism managed by the Grid Controller of India. This undermines IEX’s historical dominance in setting spot electricity prices,” said Harshal Dasani, Business Head at INVasset, PMS.

Published on July 24, 2025