Market Coupling Operator proposed for power trading: Sole MCO plan gets pushback from Grid India, IEX | Business News
3 min readNew DelhiJun 14, 2026 06:30 AM IST
Supporting the rollout of a market coupling mechanism in India — that seeks to discover uniform electricity price across exchanges — Grid Controller of India (Grid India) has called for establishment of a steering committee comprising key stakeholders to act as Market Coupling Operator (MCO).
In its draft CERC (Power Market) (Second Amendment) Regulations, 2026, issued in April, the Central Electricity Regulatory Commission (CERC) had proposed designating Grid India as the sole MCO, responsible for the operation and management of market coupling.
While Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) have supported designation of Grid India as MCO, Indian Energy Exchange (IEX) — the country’s biggest power trading bourse — opposed the draft regulations’ proposal.
India currently has three power exchanges regulated by CERC, where generators, distribution companies, traders and large consumers buy and sell electricity. IEX dominates the market with over 90% share, while PXIL and HPX account for the remainder.
Grid India, on its part, said the proposed designation of the state-owned grid operator as the sole MCO would simplify implementation and enable faster rollout of market coupling, but could also create a single point of failure for electricity market clearing.
While backing the proposal, GRID India said a regulatory fallback mechanism should be introduced to allow power exchanges to undertake price discovery in the event of a technical disruption at the MCO.
“… a single MCO design introduces a single point of failure. In case of any disruption, the entire market clearing function would be affected,” it said, citing instances in Europe where technical issues led to partial decoupling of electricity markets.
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“It is suggested that with a single MCO design, the necessary fallback regulatory mechanism may be introduced allowing the Power Exchanges to carry out price discovery in case of any technical failure at MCO,” it added.
In its submission to the regulator, Grid India said the objectives of strengthening regulatory oversight and minimising the need for frequent interventions could be effectively met through a steering committee comprising CERC, Grid India, all power exchanges, and external auditors or market monitors. “The European model of round-robin implementation with a Steering Committee has been successful. This approach adds multiple (8-9) layers of redundancy, robustness, reproducibility and fail- proof price discovery, with a robust maker and checker mechanism,” Grid India submitted to the regulator. The proposal in April’s draft regulation marked a shift from the regulator’s earlier approach outlined in its July 2025 order directing the implementation of market coupling.
Under that framework, power exchanges were to act as the MCO on a rotational basis, with Grid India serving as the fourth MCO for backup and audit purposes.
Market coupling is a mechanism that aggregates bids from all power exchanges to determine a uniform market-clearing price for electricity.
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First introduced under CERC’s Power Market Regulations, 2021, the concept is aimed at improving price discovery, reducing price disparities across markets, and enhancing overall market efficiency and stability.
Grid India underscored the need of an institutional ring-fencing of market-coupling operations due to the conflicting nature of market clearing and ensuring reliability.
“With transfer of CTU to Grid-India currently underway, transmission planning, system operations and market operations would be under one umbrella, which may be grounds for potential conflict,” it added.
