Explained: What is market coupling in power sector, and how it will change electricity pricing in India
market coupling
in the Day-Ahead Market (DAM) by January 2026. While this may sound technical, it is expected to reshape the way electricity is bought and sold in India, and could eventually help lower prices for consumers and improve efficiency in the power system.
So what exactly is market coupling, and why is it being introduced now?
What is Market Coupling: Think of it like airline ticket booking
Imagine there are three different travel apps—say App A, App B, and App C—where you can book airline tickets. Right now, each app has a different price for the same flight, even though the airline is the same. Some apps may show lower fares, others may not. Now imagine if all the apps were connected to a central system that pooled all the tickets together and offered you the best price across all platforms—automatically. That's what market coupling aims to do for electricity.
Currently, India has three power exchanges—IEX (
Indian Energy Exchange
), PXIL (Power Exchange India Ltd), and HPX (Hindustan Power Exchange). All three allow electricity buyers (like DISCOMs and large industries) and sellers (like power generators) to trade power for the next day. But each exchange operates independently, leading to different prices for the same commodity—electricity.
With market coupling, there will be a common price for power across all exchanges, determined by a single Market Coupling Operator (MCO). The goal is to ensure the most efficient match of supply and demand, regardless of which exchange the bid is placed on.
Why is this being done now?
Electricity markets are becoming more dynamic, with large variations in demand and supply throughout the day—especially with the rise of solar and wind energy. Ensuring that power is dispatched efficiently and at the lowest cost is becoming critical.
Between December 2024 and March 2025, a shadow pilot project was conducted by
Grid-India
to test if market coupling can actually deliver results. The findings were promising:
1. In the
Real-Time Market
(RTM), market coupling could save ₹1.4 crore per day.
2. Price volatility went down.
3. Power was allocated more efficiently.
These results gave the CERC confidence to roll out the reform—starting with the Day-Ahead Market.
What changes can consumers and the industry expect?
In the long term, market coupling could lead to lower and more stable power prices, especially during periods of surplus supply. For instance, when wind power is high at night or solar is abundant in the afternoon, prices fall sharply on one exchange but remain high on another. Market coupling will eliminate these gaps.
Also, it will discourage arbitrage behaviour—where buyers deliberately choose the exchange with lower prices—because now there will be one national clearing price.
For industries and DISCOMs, this could simplify buying decisions, make costs more predictable, and reduce administrative complexity.
Who will run the new system?
Rather than appointing one central operator, the CERC has adopted a round-robin model, where the three exchanges will take turns acting as the Market Coupling Operator. Grid-India will act as a standby body and oversee audits, ensuring transparency.
For now, market coupling will be implemented only in the Day-Ahead Market, where the bulk of scheduled electricity is traded. Real-Time Market (RTM) and Term-Ahead Market (TAM) coupling have been deferred due to operational and technical complexities.
What are the challenges ahead?
Market coupling may sound simple, but its execution is highly complex. All exchanges will have to align their bidding formats, upgrade their software systems, and coordinate closely in real-time. There are also concerns about whether market coupling could reduce competition among exchanges.
However, the CERC has clarified that while price discovery will be centralised, competition will continue in services, user experience, and innovation, keeping exchanges relevant.
What comes next?
The CERC has directed its staff to work with Grid-India and stakeholders to propose regulatory changes needed to implement the reform. Another pilot is expected in the Term-Ahead Market, and broader consultations will follow.
If successful, India could become one of the few countries globally with a unified, efficient, and transparent electricity market, helping ensure both cost-effective power and grid stability—key to supporting rising demand, especially from electric vehicles, industry, and green hydrogen.
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a day ago
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Last Updated: Not allowing end-of-life vehicles to refuel will be counterproductive if people aren't given alternatives, and that can't just be a token rebate of a few thousand rupees Effective 1 July 2025, the Commission for Air Quality Management (CAQM) imposed a ban in Delhi on issuing fuel to end-of-life (EOL) or overage vehicles—diesel vehicles older than 10 years and petrol vehicles older than 15 years. As part of this measure, such vehicles were not only to be denied fuel but also impounded, irrespective of the states they were registered in. According to the original directive, Delhi was to be the first to refuse fuelling these vehicles using ANPR (Automatic Number Plate Recognition) camera technology at fuel stations. The ban was to be extended to the NCR in a staggered manner, starting with high-vehicle-density districts of Faridabad, Ghaziabad, Gurugram, Gautam Buddha Nagar, and Sonipat from 1 November, and to the rest of the NCR from 1 April 2026. 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In the absence of these, personalised vehicles became the default choice for citizens. Key Pollutants Of the world's 100 cities with the worst air pollution, 74 are in India. Ironically, Delhi has the poorest air quality among capital cities. The key question is: what are the primary drivers of pollution in the country? Here they are: Industrial Emissions: Most industrial units have an abysmal record when it comes to pollution control. Vehicular Emissions: Outdated engines, fossil fuels, traffic congestion, and a weak pollution-under-control (PUC) regime lead to high PM2.5, NOx, and CO emissions. Construction and Road Dust: Ever-increasing, uncontrolled residential, commercial, industrial, and infrastructure construction—combined with poor practices—release large amounts of PM10 and PM2.5. The situation is worsened by a lack of paved roads and mechanised street cleaning. Use of Solid Fuels for Cooking and Heating: The widespread use of biomass, cow dung, and wood for cooking and heating by poor rural and urban households contributes significantly to both indoor and ambient air pollution. Women and children suffer the most. Crop Residue Burning: The burning of crop residue—particularly in winter and especially in Punjab, Haryana, and Uttar Pradesh—leads to a sharp spike in PM2.5 levels in Delhi and across northern India. Waste Burning: Across cities, the year-round open burning of solid waste at landfills results in the release of toxic pollutants. Coal-Fired Power Generation: Coal-fired power accounts for over 70 per cent of the country's electricity generation, and dependence on it is increasing. The government plans to expand coal-based thermal capacity by 80,000 MW by 2031–32. These plants emit key pollutants, including SO₂, NOx, PM, CO₂, and mercury. Widespread Use of Firecrackers: India needs no occasion to light firecrackers. Every event becomes a firecracker moment—whether it's a cricket victory, a wedding, or a festival. Firecrackers release a cocktail of harmful pollutants. Seasonal and Climatic Factors: Several natural and climatic factors further aggravate India's pollution problem: Indo-Gangetic Plain: This densely populated, flat terrain is prone to trapping pollutants, hindering natural dispersal. Himalayan Mountain Range: During winter, the Himalayas act as a barrier, preventing the free flow of air and trapping pollutants within the Indo-Gangetic Plain. Seasonal Variations: Shifts in wind patterns and temperature inversions during different seasons exacerbate pollution levels. Dust Storms: Dust storms from the Thar Desert—and occasionally even from the Sahara—carry pollutant-laden dust particles across the region. Poor Urban Planning and Lack of Public Transport: Indian cities have expanded in an unplanned manner, largely without reliable public transport systems. As a result, citizens are left with no alternative but to rely on costly and polluting personalised vehicles. Chasing The Mirage Pollution in Delhi now is a yearlong existential crisis. Whenever the crisis worsens, disproportionate blame is put on the plying of overage vehicles, firecrackers and stubble burning. Sadly, no one tries to decipher the root causes that make Delhi the most polluted capital city. I posit that all 10 causes discussed above play a role in varying degrees to put Delhi in its current predicament. Also, though Delhi is a city with fixed landmass, its pollution is boundaryless. The findings of a CSE November 2024 study put the causes as under: Local sources – 30.34 per cent Neighbouring cities – 34.97 per cent Stubble burning – 8.19 per cent Areas beyond NCR – 26.5 per cent The same CSE analysis provides the following breakdown of contributions from local sources: Vehicular emission: 50 per cent Household emission: 12.5 to 13.5 per cent Industrial emission: 9.9 to 13.7 per cent Construction emission: 6.7 to 7.9 per cent Waste burning: 4.6 to 4.9 per cent Motorisation – Upscaling From Low Base These are still the early days of motorisation for Bharat, with 31 vehicles per 1,000 population compared to 860 in the USA, 632 in the UK, 612 in Japan and 223 in China. But this calculus is set to change rapidly, powered by factors including: As per the NITI Aayog report 'Automotive Industry: Powering India's Participation in Global Value Chains' (dated April 11, 2025), India is the fourth-largest global automotive producer after China, the USA and Japan, with an annual production of 6 million vehicles. Among the demand-side drivers, India's rapid motorisation is driven by economic growth, rising disposable incomes, increasing urbanisation, and aspirational growth. These factors are propelling a surge in vehicle ownership, as people seek more convenient and efficient ways to travel, particularly in the absence of public transport. A Myopic Act According to the VAHAN database, Delhi has 6.2 million EOL vehicles—4.1 million two-wheelers, 1.8 million four-wheelers, and the rest goods carriers and commercial vehicles. Instructively, as estimated by the CSE study, Delhi air pollution has three sources—local (30 per cent), NCR (35 per cent), and other areas (35 per cent). Assuming vehicular emission contributes 50 per cent of local pollution, its contribution to Delhi's total pollution burden is at best 15 per cent. Given the size of Delhi's vehicle population and traffic congestion, the contribution of EOL vehicles to pollution is no more than 5–7.5 per cent of Delhi's air pollution burden. This is because there are many reasons for vehicular pollution including: State of engine Adulterated fuel Lax PUC regime Severe road congestion Overaged vehicles I submit that if a vehicle consistently passes stringent and transparent PUC tests, forcibly removing or impounding it based on an arbitrary age threshold has the following serious repercussions: It militates against common sense. It undermines the trust of the public in the regulatory regime. Citizens often lose well-maintained, emission-compliant vehicles. Large numbers of citizens lose their livelihood—three-wheeler owners and gig workers buy second-hand vehicles because they cannot afford new ones. Also, citizens who own or ply supposedly EOL vehicles belong to a relatively lower economic echelon, for whom buying even one vehicle is often an impossible lifetime task. Targeting them in the name of reducing Delhi air pollution is an avoidable and myopic action. The point to be noted here is that Delhi's traffic congestion is a much bigger curse than overaged vehicles. Traffic congestion worsens air pollution as it leads to increased emissions. Vehicles stuck in traffic emit pollutants at much higher rates than when moving freely, and the sheer volume of vehicles—including a high number of two-wheelers and freight traffic—exacerbates the problem. Real Reasons Lie Elsewhere The real reasons behind the exacerbation of vehicular emissions and the fast-worsening air pollution in Delhi stem from three key governmental failures: Failure to arrest the rapid growth in the acquisition of personalised vehicles. Inability to provide adequate, safe, comfortable, and affordable public transport. Failure to provide sufficient non-motorised transport (NMT) infrastructure—NMT accounts for 40–45 per cent of total traffic. Lack Of NMT Infrastructure Various studies estimate that between 45–50 per cent of people in Delhi, Kolkata, and Mumbai rely on walking, cycling, and other forms of NMT. These are people who cannot even afford public transport. A strategic shift towards non-motorised transport in Delhi would foster a more sustainable, inclusive, and liveable urban environment. But the irony is that Delhi lacks adequate NMT infrastructure—pedestrian walkways and cycle paths are either missing, inadequate, or poorly maintained, which hinders the use of walking and cycling as viable modes of transport. Also, NMT users form the most vulnerable group and suffer the most in road accidents. In Delhi, the proportion of NMT user fatalities exceeds the national average of 70.8 per cent. Bus Service In Disarray Filed in 1984–85 by a lawyer named M.C. Mehta, a PIL in the Supreme Court aimed at reducing Delhi's pollution is the country's longest-surviving public interest litigation. In a landmark judgement, the Supreme Court had directed the Government of India to augment Delhi's public transport to 10,000 buses by 1 April 2001. In 2001, Delhi's population was 13.85 million. It increased to 16.80 million by 2011 and is estimated to reach 34.7 million in 2025, according to the UN's World Urbanisation Prospects. Yet even in 2025, Delhi has failed to meet the 2001 Supreme Court mandate of 10,000 buses. Here's the current picture: The number of buses in Delhi was only 7,683 as of July 2024, including 1,970 electric buses, with an unspecified number being overaged. The number is projected to fall to 5,835 by July 2035, largely due to the rapid retirement of overaged CNG buses and inadequate replacements—in the past 18 months alone, 2,400 buses have been retired. Despite the government's push to replace CNG buses with electric ones, the additions are falling far short of the retirement rate. This situation persists despite the Delhi government's affidavit to the High Court in 2007, stating that the city needed 11,000 buses—and the transport department's current estimate that 14,000 are needed to serve a daily ridership of 4.5 million. Given this context, citizens are left with no choice but to opt for polluting personalised vehicles—adding to congestion and worsening air pollution. How does Delhi compare with its global peers? Here's the data: Delhi: 35–40 buses per 100,000 population — 5,835 buses for 34.7 million people Singapore: 102 buses per 100,000 — 5,800 buses for 5.69 million people London: 104 buses per 100,000 — 8,797 buses for 8.9 million people Beijing: 150 buses per 100,000 — 21,972 buses for 22.6 million people Hong Kong: 177 buses per 100,000 — 5,870 buses for 7.5 million people Good Optics, Bad And Unsustainable Policy Banning overaged vehicles may offer good optics, but it is a poor policy choice. In the absence of reliable public transport, private vehicles become the default option for most Indians who can afford them. Delhi Showpiece – Unaffordable And Poorly Connected Metro Rail The Delhi Metro was envisioned to provide a convenient, comfortable, safe, secure, and affordable commuting experience. It has certainly played a key role—on average, its 395 km network and 289 stations carry 5–6 million riders daily. Without it, Delhi's air pollution would have been significantly worse. However, the Metro has been a huge disappointment on two major fronts: Affordability: It is unaffordable for the poor. Delhi is a sprawling city that has grown horizontally and radially. The urban poor are typically pushed to the fringes and must travel long distances to reach their workplaces. For many, this means paying Rs 50 (for 21–32 km) or Rs 60 (for more than 32 km) one way. With subsistence-level monthly incomes, commuting by Metro could cost between Rs 3,000–3,600 a month, placing it out of reach. This fare structure is rooted in the Metro Rail (Operations and Maintenance) Act, 2002, which originally required an 8.2 per cent financial internal rate of return (FIRR) on the project. Although the Metro Rail Policy 2017 replaced FIRR with a 14 per cent economic internal rate of return (EIRR) for the city, fare policy still follows the outdated model. First-Mile and Last-Mile Connectivity: Fares are not the only barrier. Delhi Metro, like others in the country, lacks effective first-mile and last-mile connectivity. Commuters have to pay extra for these legs of the journey. It is time to make the Metro truly affordable and accessible by providing adequate last-mile and first-mile infrastructure, and by substantially reducing fares. Even the poorest pay GST today—why should public transport not be cross-subsidised? The state government must bear operational losses and treat capital expenditure as sunk cost. Moreover, Delhi-NCR needs a 1,000 km Metro network to become a thriving economic hub, a liveable region, and one that can seriously cut air pollution. In the last five years, Delhi Metro has added just 3 km to its length. It's time to take inspiration from Beijing and Shanghai if we are serious about making Delhi-NCR a world-class urban agglomeration—it is, after all, now the most populous in the world, ahead of Tokyo. Postscript The NGT banned the operation of end-of-life vehicles in Delhi in 2014. Eleven years have gone by. If governments were serious about reducing air pollution, this period would have been sufficient to plan and implement 15,000 non-polluting buses and 800 km of metro rail, with world-class first and last mile connectivity. This is the minimum Delhi needs. With growing discretionary income and rising aspirations, governments cannot stop citizens from buying personalised vehicles. But by providing adequate and affordable world-class public transport—alongside other strong demand management measures—the use of such vehicles can and must be significantly curtailed. It hasn't happened so far. It must happen now. top videos View all Not allowing end-of-life vehicles to refuel will be counterproductive if people are not provided with alternatives. And the alternative cannot be a token rebate of a few thousand rupees for purchasing new vehicles. The real solution lies in provisioning world-class public transport—as Gustavo Petro, former Mayor of Bogotá and current President of Colombia, once famously said: 'A developed country is not a place where the poor have cars. It's where the rich use public transportation." The author is a multidisciplinary thought leader with Action Bias, India-based international impact consultant, and keen watcher of changing national and international scenarios. He works as president, advisory services of consulting company BARSYL. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18's views. tags : air pollution air quality pollution control view comments Location : New Delhi, India, India First Published: July 26, 2025, 13:58 IST News opinion Opinion | Fuel Ban On Old Vehicles: A Misguided Move In India's Fight Against Air Pollution Disclaimer: Comments reflect users' views, not News18's. 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