Market Coupling Target For Jan 26 'Very Ambitious'; Sees Implementation By Dec: JM Financial

The target to implement market coupling by January 2026is “very ambitious”, and implementation will not be possible before December, 2027, said domestic brokerage firm JM Financial.

What Is Market Coupling For IEX?

According to CERC, 'market coupling' is a concept that can be used to improve the efficiency and integration of multiple interconnected markets in the electricity sector.

The primary objective of market coupling is to achieve price convergence and uniform pricing.

Through market coupling, power exchanges can look to achieve convergence in the prices of multiple markets, thereby making electricity more accessible for all.

Why Will This Process take Time?

JM Financial noted that the implementation of power market coupling will require a number of structural changes including upgrading and integration of software, modification in infrastructure for compatibility, formation of data sharing protocol, consensus on financial settlement mechanism and changes in relevant regulations.

Additionally, commenting on the CERC order, the brokerage said that driven by a strong base of employee capabilities, customer centricity and technology capability of IEX is far superior to the other two rival exchanges, Power Exchange India Limited and Hindustan Power Exchange.

The benefit of market coupling in terms of price, volume and transmission are not explicitly evident in the Indian context, the note added.

“Theoretically, it can be deduced that its market share will decline to 33.33% in due course of time…IEX has around 170 employees, nearly 2x of each in PXIL and HPX. Given the challenges in swift implementation of coupling and strong capabilities of IEX, the market share of the company will gradually taper from 75% in FY28 to 60% in FY30 in a business as usual scenario,” the note added.

IEX Share Price Target

The brokerage also gave a HOLD rating to IEX with a price target of Rs 149, adding that a slew of policy initiatives leading to new trading mechanisms like derivatives, peer-to-peer trading, Virtual PPAs and India Energy Stack (IES) will see power exchanges playing a vital role in the near future. These measures are also expected to add a new volume stream for the power exchanges.

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