Shares of Indian Energy Exchange (IEX) have witnessed a sharp decline of nearly 17% over the past two days, following the announcement of the government’s plan to implement market coupling for power exchanges by the end of the current fiscal year or early FY26. The move is aimed at establishing a single, unified price for electricity trading across all platforms.
Stock Performance and Trading Activity
On Wednesday, IEX shares fell by 6% to a low of ₹199.45 on the BSE. This followed a significant drop of 12% on Tuesday, where the stock closed at ₹211.60, down from ₹239.25 on the previous trading day. The announcement triggered a surge in trading volume, with around 18.40 lakh shares being exchanged by 1 PM on Wednesday, significantly higher than the two-week average of 6.49 lakh shares. Similarly, on the NSE, trading volumes reached approximately 5.10 crore shares, as reported by ET Now.
Understanding Market Coupling
Market coupling is a mechanism designed to streamline and integrate the pricing of electricity across various exchanges, creating a unified price through consolidated bidding. Currently, IEX holds a dominant position in the power trading market with an 84% market share. However, this new model could present challenges to its market leadership.
Once market coupling is in place, all power exchanges—Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL), and Hindustan Power Exchange Limited (HPX)—will operate under a common pricing mechanism. This will lead to more efficient resource allocation, enhanced market liquidity, and reduced price discrepancies, potentially impacting IEX’s competitive advantage.
Government’s Plan and Timeline
The Ministry of Power has initiated steps to implement market coupling and has tasked the Grid Controller with conducting a pilot study to assess the technical feasibility of the initiative. The Central Electricity Regulatory Commission (CERC) will oversee this study, which is expected to conclude by next month. Based on the findings, CERC will establish a timeline for the implementation of market coupling.
Impact on Power Exchanges
Currently, each of India’s three power exchanges— IEX, PXIL, and HPX—sets its own market clearing prices (MCPs) based on individual buy and sell bids, leading to slight variations in electricity prices across platforms. The implementation of market coupling is anticipated to bring about a more uniform pricing structure, which could reshape the competitive landscape of the power trading market.
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