Context: The Ministry of Power has released the Draft National Electricity Policy (NEP) 2026 for public consultation, proposing to replace the National Electricity Policy, 2005. The draft seeks to realign India’s power sector with the long-term vision of Viksit Bharat @ 2047, while supporting climate commitments under India’s Net Zero target for 2070.
Vision and Climate Transition
The Draft NEP 2026 aims to transform India from a power-deficient country into a reliable, competitive, and low-carbon electricity economy. Key long-term targets include:
- Per Capita Electricity Consumption:
- 2,000 kWh by 2030
- Over 4,000 kWh by 2047
- Clean Energy Expansion:
- 500 GW of non-fossil fuel capacity by 2030
- 100 GW nuclear power capacity by 2047
- Climate Commitments:
- 45% reduction in emission intensity from 2005 levels by 2030
- Alignment with Net Zero emissions by 2070
- Efficiency Goal:
- Reduction of Aggregate Technical and Commercial (AT&C) losses to single digits across all states.
Key Structural Reforms Proposed
1. Tariff and Financial Reforms
To restore the financial health of distribution companies (DISCOMs), the draft mandates:
- Automatic annual tariff revisions by State Electricity Regulatory Commissions.
- If tariff orders are delayed, indexation-based automatic revisions will apply.
This marks a shift away from politically delayed tariff decisions, a major cause of DISCOM losses.
2. Rationalising Cross-Subsidies
The policy proposes a progressive reduction in cross-subsidies, particularly for:
- manufacturing sector, and
- Indian Railways,
to enhance industrial competitiveness and support export-led growth.
3. Universal Service Obligation (USO) Flexibility
Regulators may exempt DISCOMs from USO for consumers with connected loads of 1 MW and above, allowing large consumers to source power competitively without burdening utilities.
Grid Planning and Market Design
- Resource Adequacy Planning: Mandatory 24×7 power planning at national, state, and utility levels to prevent shortages.
- Competition in Distribution: Multiple distribution licensees permitted in the same supply area.
- Distribution System Operators (DSOs): Introduced to manage rooftop solar, electric vehicles, and other distributed energy resources.
- Energy Storage: Battery Energy Storage Systems (BESS) and pumped storage recognised as critical grid infrastructure.
Governance, Data, and Consumer Rights
- Data Sovereignty: All operational power-sector data must be stored within India.
- Grid Governance Reform: State Load Despatch Centres (SLDCs) to be functionally unbundled from State Transmission Utilities.
- Consumer Empowerment: Recognition of prosumers and imposition of penalties on DISCOMs for unjustified load-shedding.
Significance
The Draft NEP 2026 represents a decisive shift from capacity addition alone to efficiency, competition, and consumer-centric governance, positioning electricity as the backbone of India’s energy transition and economic growth.