India’s renewable energy sector is facing institutional challenges that need flexible solutions. Propelled by falling solar module prices and government policy, solar capacity has expanded to 162 GW by June 2026. Yet at the very moment this transformation demands smarter, more flexible market products, India’s regulator is moving the opposite way, proposing to hand control of the power exchanges to Grid-India, a government utility whose institutional DNA is built for managing transmission systems, not commercial decisions.AdvertisementBetween May and December last year, over two billion units of solar electricity, enough to power several million homes, were curtailed because the grid could not absorb them. The solution requires transmission investment to convey electricity, flexible power plants that can ramp quickly, battery storage to absorb excess generation and discharge during lean hours, and above all, well-designed electricity markets that send the right price signals to the right players at the right time.Surplus generation in one region can be traded to regions facing shortage. A robust, functional electricity market, one with products that sellers and buyers want, is essential to manage this. Prices should fall when power is abundant at noon and rise when it is scarce in the evening, attracting whatever flexible generation or storage can respond. Good market design is what keeps a complex, renewable-heavy grid balanced without wasting energy or overloading equipment.Also Read | On antibiotics, problem isn’t just overprescribingContrary to this need, in July 2025 and January 2026, CERC proposed that Grid-India become Market Coupling Operator (MCO), pooling bids from all three exchanges – IEX, PXIL and HPX – into a single clearing algorithm that would produce a uniform national price. The stated logic is that the market is fragmented and consumers are losing out. What does the data say?AdvertisementMost electricity is traded in the Day-Ahead Market (DAM) and Real-Time Market (RTM), both short-term spot products. IEX handles roughly 80-85 per cent of trading volumes, which is hardly a fragmented market. CERC’s own shadow pilot recorded a welfare improvement of just 0.3 per cent over four months; a longer dataset puts the gain at only 0.013 per cent.Behind CERC’s stated reasons lies the question of IEX’s dominance. But dominance is not the same as abuse: There is no documented allegation of excessive fees, discriminatory access, predatory pricing, or manipulation of price discovery against IEX. So which problem is CERC actually solving?The real danger is not IEX’s market share but what happens to market innovation once a government-owned entity controls the central clearing algorithm. For example, when exchanges developed user-defined hourly contracts in the Term-Ahead Market, matched to the variable generation profile of solar and wind assets, CERC ordered them discontinued within a week in April last year.you may likeIn July 2025, CERC suggested a round-robin model under which exchanges would take turns as Market Coupling Operators month to month. By April 2026, its draft second amendment regulations abandoned this in favour of Grid-India as sole MCO. Grid-India itself, in a submission dated June 8, has urged CERC to reconsider and has asked for a round-robin system, institutional ring-fencing and a steering committee to guard against single-point failures, even though the round-robin approach would force every exchange to duplicate the capital cost of a central algorithm and add to the regulator’s oversight burden.Grid-India’s preference for administrative simplicity is rational for a system operator: Its job is to balance the grid in real time, not to compete for customers or bear commercial risk. But under full coupling, every new trading product will require rewriting an algorithm Grid-India controls, tethering market innovation to the pace of a public utility: A pace the TAM episode shows is slow and tilted towards uniformity.India’s renewable sector needs a market architecture that rewards flexible capacity with real-time pricing, opens competitive markets for frequency-regulation services, and lets storage investors price their business case. These are the real regulatory priorities rather than imagined problems of market dominance.The writer is former secretary, Ministry of Power