INDIA Law and Practice Contributed by: Anupam Varma, Poonam Verma Sengupta, Sakshi Kapoor and Rajesh Jha, JSA
2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market
trading. The primary subordinate instrument is the Guidelines for Import/Export (Cross Border) of Elec- tricity, 2018, issued by the MoP, with subsequent amendments in 2023 and 2024. CERC issued the Cross Border Trade of Electricity Regulations, 2019. Cross-Border Trade India currently imports and exports electricity with Bhutan, Nepal, Bangladesh and Myanmar through dedicated cross-border interconnections. Imports are predominantly hydropower from Bhutan and Nepal, while exports are primarily supplied to Bangladesh. Approvals Cross-border transactions require approval from the designated authority under the Guidelines for Import/ Export (Cross Border) of Electricity, 2018 (as amend- ed) and compliance with the applicable eligibility con- ditions. The NLDC acts as the system operator for cross-border electricity trade. Pricing Cross-border electricity is traded under long-term government-to-government arrangements, bilateral PPAs, competitive bidding or power exchanges, depending on the nature of the transaction. Tariffs may therefore be government-negotiated, competitively discovered, market-based or determined by CERC, as applicable. 2.3 Supply Mix of Electricity India’s total installed electricity capacity reached 520.51 GW as of January 2026. By July 2025, approxi- mately 50% of installed capacity came from non-fossil fuel sources. Solar power capacity has grown from 2.82 GW in 2014 to approximately 140 GW, a 42-fold increase, making India the third-largest solar power generator globally. Thermal generation (predominantly coal, supple- mented by gas and diesel) continues to account for the largest share of actual electricity generation, even as its share of installed capacity declines relative to renewables. Nuclear power is operated by NPCIL under the Department of Atomic Energy, with the SHANTI Act now opening the sector to private partici- pation. Hydropower remains a significant component, with NHPC as the principal state-owned generator.
India’s wholesale electricity market is a hybrid market governed by the Electricity Act, comprising long-term procurement and a short-term market. Most electricity is procured under long-term power purchase agree- ments (PPAs), with tariffs either determined by the appropriate Commission (CERC/SERC) under Section 62 or adopted under Section 63 following tariff-based competitive bidding. The balance is traded through bilateral transactions and licensed power exchanges. Power Exchanges The short-term market operates through the Indian Energy Exchange Limited (IEX), Power Exchange India Limited (PXIL) and Hindustan Power Exchange Lim- ited (HPX), which are regulated by CERC under the CERC (Power Market) Regulations, 2021. Capacity and Energy Markets India currently operates an energy-only market and does not have a formal capacity market. Capacity payments are embedded in long-term PPAs through availability-based tariffs. Pricing and Congestion Management Electricity traded on power exchanges is cleared at a uniform market-clearing price, while transmission congestion is managed by GRID-INDIA. High-Load Consumers Large consumers are served through: (a) Open Access under Section 42 of the Electricity Act; (b) Dedicat- ed Transmission Lines, which allow consumers with loads exceeding 25 MW (ISTS) or 10 MW (intra-state) to build their own lines; and (c) Captive Generation under Section 9. 2.2 Electricity Imports and Exports Electricity Imports and Exports Imports and exports of electricity are expressly per- mitted under Indian law. The Electricity Act does not prohibit cross-border trade. Section 66 of the Act empowers CERC to promote market development including cross-border trade, and Section 79 vests CERC with tariff-regulatory power over inter-state
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