IEX shares fall by 17% in two days on news of market coupling implementation by FY25

By

Surbhi Khanna

, ET OnlineLast Updated: Sep 25, 2024, 12:00:00 PM IST

Synopsis

IEX Share Price: Market coupling, expected to be implemented by the end of this fiscal year or the start of FY26, aims to establish a unified price for electricity across different trading platforms. IEX, which currently dominates the power trading market with an 84% share, may face new challenges due to this change.

Indian Energy Exchange (IEX) shares dropped by nearly 17% in the last two days after the news of implementation of market coupling for power exchanges came out. On Wednesday, the shares have fallen by 6% to day’s low of Rs 199.45 on BSE.

On Tuesday, the shares went down by 12% to Rs 211.60 from the previous close of Rs 239.25. After the news came out, by 1 PM around 18.40 lakh IEX shares were traded, which was significantly higher than the recent two-week average of 6.49 lakh shares. On the NSE, about 5.10 crore shares were traded, as reported by ET Now on Tuesday.

Market coupling, expected to be implemented by the end of this fiscal year or the start of FY26, aims to establish a unified price for electricity across different trading platforms. IEX, which currently dominates the power trading market with an 84% share, may face new challenges due to this change.

So, after this new model is implemented, market coupling will create a uniform price across all power exchanges. By consolidating bids, market coupling improves market efficiency and liquidity, enabling better allocation of resources and reducing price discrepancies.

The government, through the Power Ministry, is advancing plans for market coupling. The Ministry has directed the Grid Controller to complete a pilot study on the technical aspects of the initiative. This study, guided by the Central Electricity Regulatory Commission (CERC), is expected to be completed by next month. "CERC will then decide the timeline for implementing the necessary changes," according to reports.

India has three power exchanges: IEX, Power Exchange India Limited (PXIL), and Hindustan Power Exchange Limited (HPX). These exchanges currently operate independently, setting their own market clearing prices (MCPs) based on individual buy and sell bids. Presently, the cost of electricity across these exchanges varies only slightly.

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