**Executive Summary**
The document is a response to a parliamentary question regarding the Draft National Electricity Policy (NEP) 2026, which was released by the Ministry of Power in January 2026. The NEP 2026 aims to replace the 2005 framework with a focus on deregulation, financial viability of Distribution Companies (DISCOMs), and renewable energy. The draft Policy has been circulated for stakeholder consultation since January 20, 2026.
**Key Points / Main Content**
* **General Policy Objectives:**
* NEP 2026 intends to replace the existing National Electricity Policy, 2005.
* The policy aims to provide reliable 24x7 quality power through a financially viable and environmentally sustainable power sector at an affordable price.
* NEP 2026 sets clear goals for achieving financial turnaround and commercial viability in the electricity sector.
* The policy aims to increase the share of non-fossil fuel-based capacity, promote competition in electricity supply, and facilitate deregulation.
* The policy seeks to ensure adequate power availability, meet peak demand and overall energy requirements, and supply electricity at competitive prices to support Viksit Bharat @ 2047.
* **Resource Adequacy and Planning:**
* DISCOMs and SLDCs will prepare Resource Adequacy (RA) plans at utility and state levels according to State Commission regulations.
* The Central Electricity Authority (CEA) will prepare a corresponding national plan to ensure adequacy at the national level.
* **Financial Viability & Economic Competitiveness:**
* Tariffs must be linked to a suitable index for automatic annual revision.
* Tariffs should recover fixed costs through demand charges to avoid cross-subsidisation.
* Exemption of cross-subsidies and surcharges on manufacturing industry, railways and metro railways.
* Regulatory Commissions may exempt distribution licensees from Universal Service Obligation for consumers with a contracted load of 1 MW and above.
* Strengthening of dispute resolution mechanism.
* **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.
* Trading of surplus energy from DRE as well as storage by consumers themselves 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.
* **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.
* **Nuclear Generation:**
* 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.
* **Hydro Generation:**
* Accelerated development of storage-based hydroelectric projects for flood moderation, irrigation, and water as well as energy security.
* **Power Markets:**
* A strong regulatory framework for market monitoring and surveillance to prevent collusion, gaming, or market dominance.
* **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.
* **Distribution:**
* Measures to achieve single-digit AT&C losses.
* Shared distribution networks to enhance competition and efficiency.
* 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.
* **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 solution for all critical applications in the power system.
**Impact Analysis**
**Stakeholder: Electricity Consumers (including low-income consumers in rural and urban areas)**
* **Impact:** The NEP 2026 aims to provide reliable and quality electricity supply at competitive prices, benefiting all consumers, including low-income consumers. The interests of low-income consumers will be addressed through regulatory frameworks determined by State Electricity Regulatory Commissions and subsidy payments by State Governments.
* **Action Required:** None explicitly stated in the provided document, but consumers should monitor regulatory developments and subsidy schemes in their respective states.
**Stakeholder: Distribution Companies (DISCOMs)**
* **Impact:** DISCOMs are required to participate in decentralized advance planning for resource adequacy at utility and state levels. The policy also focuses on improving the financial viability of DISCOMs through various measures, including tariff revisions.
* **Action Required:** DISCOMs need to prepare and implement Resource Adequacy (RA) plans according to State Commission regulations and focus on improving their financial performance.
**Stakeholder: State Electricity Regulatory Commissions**
* **Impact:** Regulatory Commissions will play a crucial role in setting appropriate regulatory frameworks to protect the interests of low-income consumers and may exempt distribution licensees from Universal Service Obligation for consumers with a contracted load of 1 MW and above.
* **Action Required:** State Electricity Regulatory Commissions must develop appropriate regulatory frameworks and guidelines.
**Stakeholder: State Governments**
* **Impact:** State Governments will be responsible for providing subsidy payments to low-income consumers in accordance with the provisions of the Electricity Act, 2003.
* **Action Required:** State Governments need to ensure the timely disbursement of subsidies to low-income consumers.
**Stakeholder: Central Electricity Authority (CEA)**
* **Impact:** The CEA will prepare a national plan to ensure resource adequacy at the national level.
* **Action Required:** The CEA needs to develop a national plan for resource adequacy.
Key Entities Referenced
Draft National Electricity Policy, 2026 (NEP 2026): A proposed policy by the Ministry of Power aimed at replacing the 2005 framework, focusing on deregulation, financial viability of distribution companies, and renewable energy.
Electricity Act, 2003: The legal framework within which State Governments determine subsidy payments for low-income electricity consumers.
Ministry of Power: The primary governmental body responsible for drafting and releasing the National Electricity Policy.
State Electricity Regulatory Commissions: Entities responsible for determining appropriate regulatory frameworks concerning low-income electricity consumers.
SHANTI Act, 2025: An act that promotes advanced nuclear technologies in line with nuclear energy generation
GOVERNMENT OF INDIA
MINISTRY OF POWER
LOK SABHA
UNSTARRED QUESTION NO.2283
ANSWERED ON 12.02.2026
DRAFT NATIONAL ELECTRICITY POLICY, 2026
2283. SHRI ANAND BHADAURIA:
Will the Minister of POWER
be pleased to state:
(a) whether Draft National Electricity Policy (NEP) 2026, released by Ministry in
January 2026, aims at replacing the 2005 framework with a focus on deregulation,
financial viability of Distribution Companies (DISCOMs) and renewable energy;
(b) if so, the details thereof along with other salient features of NEP 2026;
(c) whether provisions in NEP 2020 would adversely affect the poor consumers of
electricity in urban and rural areas;
(d) if so, the details thereof; and
(e) the corrective steps proposed by the Government in this regard?
A N S W E R
THE MINISTER OF STATE IN THE MINISTRY OF POWER
(SHRI SHRIPAD NAIK)
(a) & (b) : A Draft National Electricity Policy, 2026 (NEP 2026) has been prepared by
the Ministry of Power and circulated for stakeholder consultation on 20.01.2026. The
draft Policy is intended to replace the existing National Electricity Policy, 2005. Draft
NEP 2026 lays out strategies for achieving the vision of providing reliable 24x7 quality
power through a financially viable and environmentally sustainable power sector
furthering energy security at an affordable price.
Draft NEP 2026 sets out clear goals and objectives inter alia for achieving
financial turnaround and commercial viability of the electricity sector, increasing the
share of non-fossil fuel–based capacity in line with India’s Nationally Determined
Contribution (NDC) targets, promoting competition in electricity supply, and market
development facilitating deregulation of the power sector. The salient features of the
draft NEP 2026 is included in Annexure.(c) to (e): There is no NEP 2020 notified by Ministry of Power. However, draft NEP 2026
does not contain any provision which would adversely affect poor consumers of
electricity in urban or rural areas. Draft NEP 2026 outlines provisions for ensuring
adequate availability of power with reliable and quality supply to meet both peak
demand and overall energy requirements; and enabling supply of electricity at
competitive prices to support the vision of Viksit Bharat @ 2047, which will benefit all
the consumers including low-income consumers in rural and urban areas. The interests
of low-income consumers would be addressed through appropriate regulatory
frameworks determined by State Electricity Regulatory Commissions and the subsidy
payment by the respective State Governments in accordance with the provisions of the
Electricity Act, 2003.
************ANNEXURE
ANNEXURE REFERRED IN REPLY TO PARTS (a) & (b) OF UNSTARRED QUESTION
NO. 2283 ANSWERED IN THE LOK SABHA ON 12.02.2026
*************
Salient features of the draft National Electricity Policy, 2026
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 as 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.
***********