The Government of India has unveiled the Draft National Electricity Policy (NEP) 2026, outlining a long-term roadmap to strengthen the country’s power sector with a strong emphasis on tariff rationalisation, financial recovery of distribution companies, and preparation for rising electricity demand in the coming decades.
The proposed policy aligns with the national vision of Viksit Bharat 2047 and comes nearly two decades after the last comprehensive electricity policy. It aims to create a financially sustainable, technologically advanced, and consumer-centric power ecosystem capable of supporting India’s economic growth and energy transition goals.
A key focus of the draft policy is reforming electricity tariffs to improve the financial health of distribution companies. It proposes making tariffs more reflective of actual costs and introduces mechanisms to prevent delays in annual tariff revisions. The policy suggests indexed or automatic tariff adjustments if regulatory approvals are not issued on time, while also calling for a gradual reduction in cross-subsidies. Under the framework, no tariff is expected to be set below 50 percent of the average cost of supply, ensuring greater revenue stability for utilities.
The policy also sets ambitious targets for electricity consumption, reflecting India’s development aspirations. Per capita electricity usage is projected to reach around 2,000 units by 2030 and exceed 4,000 units by 2047, compared to current levels of under 1,500 units. This anticipated growth underscores the need for large-scale capacity addition and grid expansion.
On the clean energy front, the draft policy reiterates the importance of renewable, nuclear power, and energy storage in ensuring reliable and sustainable electricity supply. It supports greater grid flexibility and proposes that renewable energy sources be given equal scheduling and operational rights alongside conventional power sources over time, helping improve integration and reliability.
Distribution sector reforms form another central pillar of the policy. Measures include reducing aggregate technical and commercial losses to single-digit levels, promoting shared distribution infrastructure, and introducing new operational models such as Distribution System Operators to manage increasingly decentralised energy resources. Market-based mechanisms, including long-term power procurement through exchanges, are also encouraged.
To support the scale of transformation envisaged, the draft estimates massive investment requirements across generation, transmission, and distribution infrastructure over the coming decades. It proposes the creation of dedicated financing platforms, risk mitigation instruments, and greater use of climate and green finance to mobilise long-term capital.
The policy further highlights the role of technology in modernising the power sector. It encourages the adoption of smart grids, advanced forecasting tools, digital utility systems, and indigenous control and automation solutions to enhance grid reliability, efficiency, and resilience.
Overall, the Draft National Electricity Policy 2026 represents a comprehensive attempt to modernise India’s power sector, balancing affordability for consumers with financial viability for utilities, while supporting the country’s clean energy transition and long-term development goals.
