Market Coupling

Facts for Prelims

Market Coupling

News: The Central Electricity Regulatory Commission (CERC) has released a staff paper on implementing market coupling in India’s power sector.

What is Market Coupling?
• Market coupling is a process in the energy sector where bids from various power exchanges are matched to determine a uniform market clearing price for electricity trading.
• It aims to optimize transmission infrastructure use, maximize economic surplus, and create simultaneous benefits for both buyers and sellers.
• This process helps in efficient price discovery and integration of different electricity markets or geographies, promoting transparency and competition in the energy trading sector.

What are main goals of Market coupling?
• Price Convergence, Optimal Resource Allocation, Enhanced Market Efficiency, Integration of renewable energy, reduced dependency on fossil guels. 

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