Market coupling, real-time segments, and renewables are pushing India from rigid PPAs to platform-led price discovery. Energy is becoming a currency” is no longer a metaphor in India’s power sector. It is becoming market design.
Over the last decade, India has quietly built the rails for a more dynamic electricity system: power exchanges, shorter-duration contracts, and near real-time scheduling. Now, with market coupling on the table, the country could be approaching a UPI-like inflection point for electricity markets: simpler access, stronger price discovery, and faster balancing of supply and demand.
The shift: from 25-year PPAs to flexible procurement – For decades, India ran on long-term Power Purchase Agreements (PPAs), typically 20–25 years, signed by state discoms with generators. This ensured stability but created rigidity.
That rigidity is now being tested by variable renewables, electrification, and fast-changing industrial demand. India’s short-term markets are stepping in as the balancing layer.
CERC’s annual short-term power market reporting shows that in FY2023–24, the short-term market made up ~12.5% of total electricity generation, with the remaining ~87.5% largely procured through long-term contracts.
This is still a minority share, but its influence is rising because short-term markets increasingly set the “marginal” price signals that procurement teams watch.
Short-term trading: the volume story is already big
Short-term electricity transactions in India have expanded significantly over time (as your draft notes). What’s now becoming clearer is that trading is no longer “only for imbalance.”
Exchange-based volumes have reached meaningful scale. Indian Energy Exchange (IEX) reported 121 billion units (BU) traded in FY2024–25, up ~19% YoY, and cited an average Day-Ahead Market (DAM) price of ₹4.47/unit (lower YoY).
That kind of scale starts to matter for discom procurement strategies, industrial open access buying, and renewable balancing.
The “UPI-like” role of exchanges: access + transparency
UPI succeeded because it gave millions of users instant access, a standard interface, and predictable settlement. Power exchanges are doing something similar for electricity:
- Instant market access: buyers and sellers transact digitally rather than relying only on bilateral negotiation.
- Transparent price discovery: daily and block-wise clearing prices replace opaque contracts.
- Operational flexibility: DAM, RTM, TAM, and green segments allow procurement closer to demand reality.
There’s also evidence that open access buyers are already using exchanges strategically. CERC reported that open access industrial consumers bought 11.03 BU through collective transactions in FY2023–24, around 12.8% of the combined DAM/GDAM/HP-DAM/RTM exchange volume that year. That’s not small. It’s a sign that sophisticated buyers are treating electricity like a tradable input cost.
Market coupling: the reform that could deepen the ecosystem
The biggest catalyst now is market coupling, a reform aimed at producing a single uniform market-clearing price by pooling bids across exchanges.
CERC has already been running pilots and issued directions for implementation in a phased manner, starting with the Day-Ahead Market (DAM).
This matters because market coupling tends to:
- improve liquidity,
- reduce fragmentation,
- optimise transmission usage,
- and tighten price discovery.
It also changes competitive dynamics among exchanges and will push participants to optimise bidding and forecasting, not just rely on market dominance or legacy procurement habits.
Renewables are the real reason trading is becoming essential
Trading becomes a necessity, not a choice, when renewables scale.
India has publicly committed to 500 GW of non-fossil energy capacity by 2030, and to meeting 50% of energy requirements from renewables by 2030.
Solar and wind don’t follow demand, they follow weather. That variability forces the system to build flexibility: real-time balancing, market-based procurement, ancillary services, and storage. In that future grid, exchanges are not “optional marketplaces.” They are the control layer that helps the system absorb variability without overpaying for rigid capacity.
The road ahead with platform economics meets power economics
Electricity trading in India is still a fraction of total consumption, but its influence is growing rapidly because it sets marginal prices, enables flexibility, and reduces procurement opacity.
If market coupling succeeds, and participation expands across discoms, industries, renewable developers, and future distributed systems, electricity markets could become the backbone of India’s modern power economy.
UPI changed how India moves money. Power exchanges, plus coupling, could change how India moves electricity. And when that happens, India may finally witness its “UPI moment” for power markets.
