The Central Electricity Regulatory Commission (CERC) has proposed the establishment of a capacity market for electricity in India, aimed at ensuring sufficient generation capacity and encouraging investment in new power resources. This market would operate alongside the existing energy market, allowing for separate contracting of capacity and guaranteeing remuneration for capacity providers. Current power supply operates under long-term power purchase agreements, which secure fixed costs for generators but may not ensure availability during peak demand periods. The capacity market is designed to address investment shortfalls in the energy-only market and manage the challenges posed by intermittent renewable energy sources. CERC's discussion paper highlights the need for reforms, including auction-based capacity procurement for distribution companies (discoms) and a reserve capacity market. Rohit Bajaj, joint managing director of the Indian Energy Exchange (IEX), emphasized that a well-structured capacity market could provide the right investment signals to generators, reduce uncertainty for discoms, and protect consumers from price volatility. The IEX plans to actively participate in the stakeholder consultation process to refine these proposals.