**Executive Summary**
The Ministry of Power has released the Draft National Electricity Policy (NEP) 2026 for public consultation. This policy aims to transform India's power sector to meet the goals of Viksit Bharat @2047 and to replace the existing NEP notified in 2005. It sets ambitious targets for per capita electricity consumption (2,000 kWh by 2030 and over 4,000 kWh by 2047) and aligns with India’s climate commitments, including net-zero emissions by 2070.
**Key Points / Main Content**
* **Resource Adequacy (RA):**
* DISCOMs and SLDCs to prepare RA plans at utility and state levels.
* CEA to prepare a corresponding national plan.
* **Financial Viability & Economic Competitiveness:**
* Tariffs must be linked to a suitable index for automatic annual revision.
* Tariffs should progressively recover fixed costs through demand charges.
* Exemption of cross-subsidies and surcharges for manufacturing, railways, and metro railways.
* Regulatory Commissions may exempt distribution licensees from Universal Service Obligation for consumers with contracted load of 1 MW and above.
* Strengthening of dispute resolution mechanism to reduce the burden on Regulatory Commissions.
* **Renewable Energy Generation & Storage:**
* RE capacity addition through market-based mechanisms and captive power plants.
* Installation of storage by distribution licensee on behalf of small consumers and by bulk consumers themselves to facilitate adoption of Distributed Renewable Energy (DRE).
* Trading of surplus energy from DRE and storage by consumers themselves (P2P) or through aggregators.
* Parity between RE and conventional sources in scheduling and deviation by 2030.
* Market-based deployment of storage, BESS technologies, domestic manufacturing of cells, and demand-side incentives.
* **Thermal Generation:**
* Integration of storage and repurposing of older units for grid support.
* Exploring direct utilization of steam from thermal plants for applications such as district cooling or industrial processes.
* **Nuclear Generation:**
* Adoption of advanced nuclear technologies, developing Modular Reactors, setting up Small Reactors, and achieving 100 GW by 2047, in line with SHANTI Act, 2025.
* **Hydro Generation:**
* Accelerated development of storage-based hydroelectric projects.
* **Power Markets:**
* Strong regulatory framework for market monitoring and surveillance.
* **Transmission:**
* Adoption of latest technologies and suitable compensation for land use to address Right of Way (RoW) challenges.
* Parity of transmission tariff with conventional power by 2030 for all new RE capacity.
* Utilization-based framework for allocation of transmission connectivity.
* **Distribution:**
* Measures to achieve single-digit AT&C losses.
* Shared distribution networks to enhance competition and efficiency.
* Establishment of a Distribution System Operator (DSO).
* N-1 redundancy at distribution transformer level in all cities with a population greater than 10 lakh by 2032.
* **Grid Operations:**
* Functional unbundling of State Transmission Utilities (STUs).
* Alignment of State Grid Codes with Indian Electricity Grid Code specified by CERC.
* **Cybersecurity:**
* Establishment of Robust cybersecurity framework.
* Mandatory storage of power sector data within India.
* **Data Sharing:**
* Sharing of operational and market data under a framework prescribed by the Central Government.
* Ensuring real-time visibility of Distributed Energy Resources to DISCOMs and SLDCs.
* **Technology & Skill Development:**
* Transition to indigenously developed SCADA system by 2030.
* Development of domestic software solutions for all critical applications.
**Impact Analysis**
**DISCOMs and SLDCs**
* **Impact:** Required to prepare RA plans at utility and state levels, provide data for national framework.
* **Action Required:** Develop and implement RA plans according to regulations, ensure data visibility for Distributed Energy Resources.
**State Commissions**
* **Impact:** Responsible for regulations related to RA plans.
* **Action Required:** Establish regulations for RA plans, oversee implementation by DISCOMs and SLDCs.
**Central Electricity Authority (CEA)**
* **Impact:** Responsible for the national RA plan.
* **Action Required:** Develop and implement a national RA plan.
**Regulatory Commissions**
* **Impact:** Impacted by the strengthening of dispute resolution mechanisms, exemption of Universal Service Obligation.
* **Action Required:** Review and adapt to new dispute resolution mechanisms, implement Universal Service Obligation exemptions.
**Power Sector Stakeholders (Generators, Transmitters, Distributors, Consumers)**
* **Impact:** Subject to new policies and regulations related to tariffs, RE integration, data sharing, and cybersecurity.
* **Action Required:** Comply with new regulations, adapt to changes in tariffs and operational procedures.
**Manufacturing Industry, Railways, and Metro Railways**
* **Impact:** Expected to benefit from the exemption of cross-subsidies and surcharges on electricity tariffs, leading to increased economic competitiveness.
* **Action Required:** Monitor and take advantage of the reduced electricity costs.
Key Entities Referenced
Draft National Electricity Policy (NEP) 2026: Proposed policy by the Ministry of Power intended to transform the power sector for Viksit Bharat @2047.
Ministry of Power: The central ministry responsible for the proposed National Electricity Policy (NEP) 2026.
Viksit Bharat @2047: The vision for a developed India by 2047, which the Draft NEP 2026 aims to support through power sector transformation.
National Electricity Policy (NEP): The existing electricity policy, last notified in 2005, which the Draft NEP 2026 intends to replace.
Regulatory Commissions: The regulatory bodies that may exempt distribution licensees from the Universal Service Obligation.
Ministry of Power
DRAFT NATIONAL ELECTRICITY POLICY (NEP),
2026 RELEASED FOR PUBLIC CONSULTATION
WITH STAKEHOLDERS
प्रव तथ: 21 JAN 2026 9:32AM by PIB Delhi
The Ministry of Power announced the release of a new “Draft National Electricity Policy (NEP) 2026”.
The Draft NEP 2026 aims to transform the power sector for meeting the vision of Viksit Bharat @2047.
The policy, once finalised, intends to replace the existing NEP which was notified in 2005..
The first National Electricity Policy, notified in February 2005, addressed fundamental challenges of the
power sector, including demand–supply deficits, limited access to electricity, and inadequate
infrastructure. Since then, India’s power sector has witnessed transformational progress. Installed
generation capacity has increased fourfold with significant private sector participation; 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 flexibility and efficiency in power procurement across the country.
In spite of these achievements, persistent challenges remain, particularly in the distribution segment like
high accumulated losses and outstanding debt. Tariffs in several segments remain non–cost reflective, and
high cross-subsidisation has resulted in elevated industrial tariffs, adversely affecting the global
competitiveness of Indian industry.
Against this backdrop, the Draft NEP 2026 sets ambitious yet necessary goals. The Policy targets per
capita electricity consumption of 2,000 kWh by 2030 and over 4,000 kWh by 2047. It also aligns with
India’s climate commitments, including reduction of emissions intensity by 45 percent below 2005 levels
by 2030 and achievement of net-zero emissions by 2070, necessitating a decisive shift towards low-carbon
energy pathways.
Draft NEP 2026 includes following major interventions:
1. Resource Adequacy (RA):
To ensure required capacity expansion through decentralized advance planning, DISCOMs and
SLDCs shall prepare RA plans at utility and state levels, in accordance with the regulations of State
Commissions. CEA will prepare a corresponding national plan to ensure adequacy at the national
level.
2. Financial Viability & Economic Competitiveness:
Tariffs must be linked to a suitable index for automatic annual revision which operates if no tariff
order is passed by the State Commission.
Tariffs should progressively recover fixed costs through demand charges to avoid cross-
subsidisation between the tariff components as well as among various categories of consumers.Exemption of cross-subsidies and surcharges on manufacturing industry, railways and metro
railways to increase the economic competitiveness of Indian goods and reduce logistics cost.
Regulatory Commissions, in consultation with Appropriate Governments, may exempt the
distribution licensees from the Universal Service Obligation in respect of consumers having a
contracted load of 1 MW and above.
Strengthening of dispute resolution mechanism to reduce burden on Regulatory Commissions,
enable faster dispute resolution and reduce financial burden on consumers.
3. Renewable Energy Generation & Storage:
RE capacity addition through market-based mechanisms and captive power plants.
Installation of storage by distribution licensee on behalf of small consumers to get benefit of
economies of scale and by bulk consumers themselves to facilitate adoption of Distributed
Renewable Energy (DRE) sources.
Trading of surplus energy from DRE as well storage by consumers themselves (P2P) or through
aggregators.
Parity between RE and conventional sources in scheduling and deviation by 2030.
Market-based deployment of storage, use of emerging Battery Energy Storage System (BESS)
technologies, domestic manufacturing of cells and other components of BESS and demand side
incentives like VGF for BESS and pumped storage projects.
4. Thermal Generation:
Integration of storage, and repurposing of older units for grid support to enable greater renewable
energy integration.
Exploring possibility of direct utilization of the steam generated from thermal plants for applications
such as district cooling or industrial processes for optimum utilization.
5. Nuclear Generation:
In line with the provisions of SHANTI Act, 2025, adoption of advanced nuclear technologies,
developing Modular Reactors, setting up Small Reactors, and use of nuclear energy by commercial
and industrial consumers to achieve 100 GW by 2047.
6. Hydro Generation:
Accelerated development of storage-based hydroelectric projects for flood moderation, irrigation,
and water as well as energy security.
7. Power Markets:
A strong regulatory framework for market monitoring and surveillance to prevent collusion,
gaming, or market dominance.
8. Transmission:
Adoption of latest technologies and suitable compensation for land use to address Right of Way
(RoW) challenges.
Parity of transmission tariff with conventional power by 2030 for all types of new RE capacity.
Utilization-based framework for allocation of transmission connectivity, along with appropriate
regulatory mechanisms to ensure optimal use and prevent speculative holding of connectivity.
9. Distribution:
Measures to achieve single-digit AT&C losses.
Shared distribution networks to enhance competition and efficiency, while eliminating the
requirement of duplication of network.Establishment of a Distribution System Operator (DSO) to facilitate sharing of network and
integration of distributed renewables, storage, Vehicle-to-Grid (V2G) systems.
N-1 redundancy at distribution transformer level in all cities with population more than 10 lakh by
2032. Such cities to be considered for undergrounding of distribution network in congested areas.
10. Grid Operations:
Functional unbundling of State Transmission Utilities (STUs) and creation of independent state-
level entities to manage SLDC operations and transmission planning functions.
Alignment of State Grid Codes with Indian Electricity Grid Code specified by CERC
11. Cybersecurity:
Establishment of Robust cybersecurity framework.
Mandatory storage of power sector data within India to ensure data sovereignty and system
resilience.
12. Data Sharing:
Sharing of operational and market data under a framework prescribed by the Central Government.
Ensuring real-time visibility of Distributed Energy Resources to DISCOMs and SLDCs.
13. Technology & Skill Development:
Transition to indigenously developed SCADA system by 2030.
Development of domestic software solution for all critical applications in the power system.
With the various new provisions, the Draft NEP 2026 provides a comprehensive blueprint for a
future-ready, financially viable and environmentally sustainable power sector to provide reliable
and quality power at affordable price to meet the goals of Viksit Bharat @ 2047.
***
NR
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