On 20-1-2026, the Ministry of Power issued the draft of National Electricity Policy (NEP) 2026, introducing a framework that ensures reliable affordable and sustainable electricity supply. It aims to bring transformation to power sector aligning with the vision of Viksit Bharat @2047.
This Draft policy invites suggestions from stakeholders before 19-2-2026, which can be submitted at rr1-mop@gov.in.
Background:
The first National Electricity Policy was introduced in 2005 when power sector faced fundamental challenges such as demand—supply deficits, low access to electricity, insufficient private participation, and underdeveloped infrastructure.
Since then, following transformations were noted:
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Installed generation capacity has increased fourfold, driven significantly by private sector participation.
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Universal electrification was achieved in March 2021.
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A unified national grid became operational in December 2013.
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Per capita electricity consumption rose to 1,460 kWh in 2024—25.
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Power exchanges and markets evolved, enhancing efficiency and procurement flexibility.
However, despite these achievements, persistent systemic issues remain related to distribution segment. DISCOMs continued to face:
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High accumulated losses and debt
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Tariffs that are often non-cost-reflective
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Heavy cross-subsidisation leading to elevated industrial tariffs, affecting global competitiveness
In response to deal with these backdrops Power Ministry has drafted NEP 2026 which aims to achieve the set milestones to sustain growth and ensure long-term sustainability:
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Per capita electricity consumption:
○ 2,000 kWh by 2030
○ 4,000+ kWh by 2047
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Climate alignment:
○ 45% reduction in emissions intensity from 2005 levels by 2030
○ Net-zero emissions by 2070
Key Takeaways of National Electricity Policy:
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National Electricity Policy is introduced in compliance with Electricity Act 2003, replacing the earlier National Electricity Policy of 2005.
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To ensure planned and reliable capacity expansion:
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DISCOMs and SLDCs will prepare utility- and state-level Resource Adequacy (‘RA’) plans under State Commission regulations.
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The Central Electricity Authority (‘CEA’) will consolidate these into a national RA plan.
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The draft emphasizes restoring the sector’s financial health:
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Indexed tariffs with automatic annual revisions where State Commissions delay orders.
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Progressive recovery of fixed costs through demand charges to reduce cross-subsidisation.
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Exemption from cross-subsidies and surcharges for manufacturing industries, railways, and metro rail to boost competitiveness.
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Regulatory Commissions may exempt distribution licensees from Universal Service Obligation for consumers with contracted load ≥ 1 MW.
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Strengthening dispute resolution mechanisms to reduce burdens on regulators and consumers.
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To accelerate India’s clean energy transition:
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Renewable Energy (‘RE’) capacity addition via market-based mechanisms and support for captive RE projects.
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Storage installation by distribution licensees on behalf of small consumers to leverage economies of scale; bulk consumers may install their own storage.
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Allowing peer-to-peer (P2P) trading of surplus DRE energy and storage through aggregators.
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Parity between RE and conventional sources in scheduling and deviation by 2030.
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Promotion of market-based deployment of storage, BESS technologies, and domestic manufacturing of cells and components.
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Demand-side support such as Viability Gap Funding (‘VGF)’ for BESS and pumped storage.
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The sector advances toward a low-carbon future, but thermal power will continue to play a role:
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Integration of storage solutions with thermal plants.
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Repurposing older units for grid support and improved reliability.
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Exploring direct use of thermal plant steam for district cooling and industrial processes.
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This policy is in line with the SHANTI Act, 2025, supporting:
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Adoption of advanced nuclear technologies
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Development of Modular and Small Reactors
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Use of nuclear energy by commercial and industrial consumers
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A target of 100 GW nuclear capacity by 2047
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To expand storage-based clean energy:
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Accelerated development of storage-based hydroelectric projects
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Focus on flood moderation, irrigation, and overall water and energy security
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The policy calls for accelerated storage-based hydropower development, strengthened market surveillance, and modernized transmission systems using advanced technologies, fair RoW compensation, RE tariff parity by 2030, and utilisation-based connectivity to prevent speculative holding.
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It promotes achieving single-digit AT&C losses, adopting shared distribution networks, establishing DSOs for RE-storage-V2G integration, ensuring N-1 redundancy in large cities by 2032, implementing underground networks in congested areas, and improving grid governance through STU unbundling and alignment with the Indian Electricity Grid Code.
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It mandates strong cybersecurity measures, compulsory domestic storage of power-sector data, structured data-sharing with real-time DER visibility, and a transition to indigenous SCADA systems by 2030 along with domestic development of all critical power-system software.