The Ministry of Power has invited comments and suggestions from stakeholders on the Draft National Electricity Policy (NEP) 2026, a comprehensive framework aimed at addressing long-standing challenges in India’s power sector and aligning it with future demand, sustainability goals, and energy security requirements.
The draft policy has been placed in the public domain for consultation, with stakeholders given 30 days to submit their feedback. It seeks to tackle persistent structural issues, particularly in the electricity distribution segment, including accumulated financial losses, mounting debt of distribution companies (DISCOMs), non-cost-reflective tariffs, and high levels of cross-subsidisation among consumer categories.
According to the Ministry, despite multiple reform measures undertaken since the previous policy was notified in 2005, the sector continues to face financial and operational inefficiencies. Industrial tariffs remain elevated in several states due to cross-subsidies, impacting the competitiveness of Indian manufacturing and exports.
The Draft NEP 2026 outlines a roadmap to promote competition, strengthen grid reliability, and enable large-scale integration of renewable energy. It places strong emphasis on resource adequacy planning, proposing that DISCOMs and State Load Dispatch Centres prepare utility-level and state-level plans, while a national-level plan would be developed to ensure long-term supply reliability.
The policy sets ambitious consumption and decarbonisation targets, aiming to increase per capita electricity consumption to 2,000 kWh by 2030 and beyond 4,000 kWh by 2047. It aligns with India’s climate commitments, including a 45 per cent reduction in emissions intensity from 2005 levels by 2030 and the national goal of achieving net-zero emissions by 2070.
Key reform measures proposed in the draft include functional unbundling of State Transmission Utilities, adoption of tariff indexation mechanisms to allow automatic annual revisions where regulatory delays occur, and a gradual shift towards demand-based charges to ensure recovery of fixed costs and reduce cross-subsidisation.
The draft also recommends the creation of a Distribution System Operator (DSO) to facilitate network sharing and support the integration of distributed renewable energy, energy storage systems, electric vehicles, and vehicle-to-grid technologies. In the transmission segment, it proposes a utilisation-linked framework for allocating connectivity, supported by appropriate regulatory oversight to discourage speculative capacity holding.
To support energy transition goals, the policy encourages greater adoption of energy storage solutions and the repurposing of older power generation units for grid balancing services. It also explores the role of advanced nuclear technologies, including small and modular reactors, and proposes expanding nuclear power deployment for commercial and industrial users, with a long-term target of achieving 100 GW of nuclear capacity by 2047.
The Draft National Electricity Policy 2026 represents a significant step toward creating a financially sustainable, consumer-centric, and low-carbon power sector, while ensuring reliable and affordable electricity to support India’s long-term economic growth.
