MELTDOWN IN THE POWER CORRIDORS

After years of dominating the power trading market, the Indian Energy Exchange stares at loss of leadership position and relevance as the Central Electricity Regulatory Commission gears up to implement market coupling of power exchanges. Seen as the first step towards a centralised power distribution, this move could pose an existential threat to IEX

- Avaan Kartik

 

The year 2024 kicked off on a positive note for the Indian Energy Exchange (IEX), the country’s largest power trading platform. It reported nearly 15% year-on-year increase in overall trading volume in December 2023, thanks to higher electricity trading volume, lower market clearing price and higher sell bids. However, that might not be enough to warrant a celebration in the IEX corridors as policy changes knock at the doors of power trading companies. 

Last year, the government directed the Central Electricity Regulatory Commission (CERC) to hasten the implementation of market coupling, a strategy to introduce uniformity of operations of power exchanges. CERC, in its draft Power Market Regulations proposed in 2020, defined market coupling as “the process whereby collected bids from all the Power Exchanges are matched, after taking into account all bid types, to discover the uniform market clearing price for the Day Ahead Market or Real-time Market or any other market as notified by the Commission, subject to market splitting”. It noted that this process will help make power prices uniform across all exchanges. The draft was approved in August 2021.

The government’s desire to implement market coupling has triggered apprehensions regarding the future of IEX and its dominant position in the power trading space.