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Market coupling

2023 AUG 25

Preliminary   > Economic Development   >   Indian Economy and Issues   >   Energy

Why in news?

  • The Central Electricity Regulatory Commission (CERC) has released a staff paper on implementing market coupling in India's power sector.

What is market coupling?

  • Market coupling is a process in the energy sector where bids from various power exchanges are matched to determine a uniform market clearing price for electricity trading.
  • The CERC (Central Electricity Regulatory Commission) has introduced provisions for market coupling among power exchanges in the country under its CERC Power Market Regulations (PRC) 2021. However, these provisions are yet to be officially implemented.

Benefits of market coupling:

  • It aims to optimize transmission infrastructure use, maximize economic surplus, and create simultaneous benefits for both buyers and sellers.
  • This process helps in efficient price discovery and integration of different electricity markets or geographies, promoting transparency and competition in the energy trading sector.

Add ons:

  • India has three power exchanges:
    • Indian Energy Exchange (IEX)
    • Power Exchange of India (PXIL)
    • Hindustan Power Exchange (HPX)


In the context of Indian economy, the term ‘market coupling’ is largely associated with:

(a) Agriculture export

(b) Electricity trading

(c) Government budgeting

(d) Bank capitalization