The Ministry of Power has directed to the Central Electricity Regulatory Commission (CERC) to initiate a market coupling process of multiple electricity exchanges, which could make prices uniform across platforms.
Key points
- India has three power exchanges – IEX, Power Exchange India Limited (PXIL) and Hindustan Power Exchange Limited (HPX).
- These are voluntary markets and each of them collect buy bids and sell bids on their own, and thus, come up with their own market clearing prices (MCP).
- Each power exchange has a different cost of electricity, even though it is usually higher or lower to each other only by a few paisa.
- Market coupling is a model where buy bids and sell bids from all power exchanges in the country will be aggregated and matched to discover a uniform MCP.
- It means there will be only one price for the electricity that is to be traded at any point of time through these exchanges.
Benefits
- Power exchanges will rendered as a platform where only buy and sell bids will be received and power dispatched to the buyer.
- Apart from the point of uniform price discovery across exchanges mentioned above, the government wants market coupling also because it wants to significantly increase the share of power exchanges in the trade of electricity.
- The government wants to reduce the current format of long-term power purchase agreements (PPAs), which run for as long as 25 years.
- It will also help improve the overall allocation of transmission corridor amongst the power exchanges. exchanges.
