The Ministry of Power has released the Draft National Electricity Policy (NEP) 2026, aimed at transforming India’s power sector to achieve the vision of Viksit Bharat @2047. Once finalized, the Draft NEP 2026 will replace the existing policy, notified in 2005.
The first NEP, issued in 2005, addressed key challenges such as demand–supply deficits, limited electricity access, and inadequate infrastructure. Since then, India’s power sector has made significant progress: installed generation capacity has quadrupled, universal electrification was achieved by March 2021, a unified national grid became operational in December 2013, and per capita electricity consumption reached 1,460 kWh in 2024–25. Power markets and exchanges have improved procurement flexibility and efficiency nationwide.
Despite these achievements, challenges persist, particularly in the distribution segment, including high losses, outstanding debt, non-cost-reflective tariffs, and cross-subsidization affecting industrial competitiveness.
Key objectives of Draft NEP 2026:
- Per capita electricity consumption: 2,000 kWh by 2030 and over 4,000 kWh by 2047.
- Climate goals: Reduce emissions intensity by 45% below 2005 levels by 2030; achieve net-zero by 2070, emphasizing low-carbon energy pathways.
Major interventions proposed in Draft NEP 2026 include:
Resource Adequacy:
- DISCOMs and SLDCs to prepare state and utility-level capacity plans; CEA to prepare national-level adequacy plans.
Financial Viability & Economic Competitiveness:
- Automatic annual tariff revisions if no order is issued by State Commissions.
- Progressive recovery of fixed costs through demand charges; reduction of cross-subsidies.
- Exemptions for manufacturing, railways, and metro rail to boost competitiveness.
- Strengthening dispute resolution to reduce burden on commissions.
Renewable Energy & Storage:
- Market-based RE capacity addition; captive power plants.
- Deployment of storage by distribution licensees and bulk consumers.
- P2P energy trading, parity between RE and conventional sources by 2030.
- Promotion of domestic BESS manufacturing, incentives for storage and pumped hydro.
Thermal Generation:
- Integration with storage; repurposing older units for grid support.
- Explore use of thermal plant steam for district cooling or industrial processes.
Nuclear Generation:
- Adoption of advanced technologies, modular reactors, and small reactors.
- Target of 100 GW nuclear capacity by 2047.
Hydro Generation:
- Accelerated development of storage-based hydro projects for flood management, irrigation, and energy security.
Power Markets & Transmission:
- Regulatory frameworks to prevent market collusion and dominance.
- Use of latest transmission technologies; compensation for land use challenges.
- Parity of transmission tariff with conventional power for new RE capacity by 2030.
Distribution:
- Single-digit AT&C losses.
- Shared networks to enhance competition; establishment of Distribution System Operators (DSO).
- N-1 redundancy at distribution transformers in cities >1 million population by 2032; undergrounding in congested areas.
Grid Operations & Cybersecurity:
- Functional unbundling of STUs; independent state-level SLDCs.
- Alignment with Indian Electricity Grid Code; robust cybersecurity framework.
- Mandatory storage of power sector data within India.
Data & Technology Development:
- Real-time visibility of Distributed Energy Resources.
- Transition to indigenously developed SCADA system by 2030.
- Domestic software solutions for critical applications.
The Draft NEP 2026 aims to provide a future-ready, financially viable, and environmentally sustainable power sector, delivering reliable and quality electricity at affordable prices while supporting India’s goal of Viksit Bharat @2047.
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