Shares of Indian Energy Exchange (IEX) fell sharply by nearly 10 percent on June 11 as Centre is likely planning a stakeholder consultation on market coupling, bringing back jitters for the power exchange which has the largest market share in all the electricity traded on Indian exchanges.
Moneycontrol has learnt from people familiar with the development that the Power Minister plans to carry out a meeting with all stakeholders on benefits for market coupling, and that the process will happen through a broad bid and not internal bid. Power Minister Manohar Lal may hold consultations with stakeholders to this effect, to apprise them about the benefits of market coupling.
The mechanism of market coupling will ensure buy and sell bids from all power exchanges in India will be aggregated and matched, in order to discover a uniform clearing price, which will result in only one price for the electricity that is to be traded through power exchanges. At present, each of the power exchange has a marginally different cost of electricity. Read More
If implemented, power exchanges will be reduced to only be a platform to buy and sell bids will be received. Market coupling is likely to reduce the market share of IEX, triggering a selloff in the share price.
Spot electricity prices on India’s power exchanges had slumped by 25 percent on an average in May, compared to a year ago as unseasonal rains lowered temperatures and cut power demand.
Market coupling - if and when implemented - will not have any immediate impact on the end user, but in the long run, it could reduce overall power tariffs.
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