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The Ministry of Power has released the draft National Electricity Policy 2026, inviting stakeholder feedback within 30 days. The policy aims to reduce DISCOM losses, address non-cost-reflective tariffs, and curb high cross-subsidisation, while promoting competition, grid resilience, and consumer-centric services. It sets targets of 2,000 kWh per capita consumption by 2030 and over 4,000 kWh by 2047, aligning with India's climate commitments. Key measures include resource adequacy plans, tariff reforms, regulatory strengthening, renewable integration, and nuclear energy expansion to meet the country's growing power and sustainability goals.
The Ministry of Power has invited stakeholder feedback on the draft National Electricity Policy (NEP) 2026, which focuses on reducing losses and debt in power distribution companies (DISCOMs), addressing non-cost-reflective tariffs, and limiting high cross-subsidisation. Advertisement
A non-cost-reflective tariff occurs when certain consumer groups are charged less than the actual cost of generating, transmitting, and distributing electricity to them. Cross-subsidisation, meanwhile, involves charging higher tariffs to industrial, commercial, or higher-income users to subsidise lower tariffs for groups like agricultural consumers and low-income households.
The draft policy also emphasizes promoting competition, strengthening grid resilience to accommodate higher shares of renewable energy, and offering consumer-focused services supported by demand-side interventions. Stakeholders have 30 days to submit their comments.
Despite progress since 2005, the power sector continues to face significant challenges, particularly in the distribution segment. High accumulated losses, outstanding debts, and tariffs that remain below actual costs have put pressure on industrial tariffs, affecting the global competitiveness of Indian businesses.
The NEP 2026 sets ambitious targets, aiming for per capita electricity consumption of 2,000 kWh by 2030 and over 4,000 kWh by 2047. It also supports India's climate goals, including a 45 per cent reduction in emissions intensity from 2005 levels by 2030 and achieving net-zero emissions by 2070.
To ensure resource adequacy, DISCOMs and State Load Dispatch Centres will prepare plans at utility and state levels, while the Central Electricity Authority will coordinate a national plan. The draft also highlights the importance of cybersecurity, technology adoption, and skill development.
In terms of grid operations, the policy proposes unbundling state transmission utilities and creating independent state-level entities to manage SLDC operations and transmission planning. Tariffs should be linked to a suitable index for automatic annual revisions if no tariff order is issued by state commissions. It also recommends recovering fixed costs through demand charges to gradually reduce cross-subsidisation.
The draft suggests establishing a distribution system operator (DSO) to enable network sharing and integrate distributed renewables, energy storage, and vehicle-to-grid systems. For transmission, a utilisation-based allocation framework is proposed, alongside regulatory mechanisms to prevent speculative holding of connectivity.
A strong regulatory framework is emphasized for market monitoring to prevent collusion, gaming, or dominance. The draft also encourages integrating storage, repurposing older units to support the grid, and advancing renewable energy integration.
Comments are also sought on nuclear energy expansion, including adopting advanced technologies, modular reactors, small reactors, and enabling commercial and industrial use to achieve a 100 GW nuclear capacity by 2047.
The first National Electricity Policy, introduced in 2005, had addressed major challenges such as demand-supply gaps, limited access to electricity, and insufficient infrastructure, laying the foundation for the sector's development.
Source PTI
FAQ
Q1. What is the purpose of the draft National Electricity Policy 2026
The Ministry of Power has released the draft National Electricity Policy (NEP) 2026 to address ongoing challenges in India's power sector, particularly in distribution. The policy seeks to reduce DISCOM losses, limit non-cost-reflective tariffs, curb high cross-subsidisation, and improve overall financial and operational efficiency. It also aims to strengthen grid resilience, promote competition, integrate renewable energy, and offer consumer-centric services, while supporting India's climate goals and ensuring reliable electricity access for all.
Q2. What are the key targets set by the NEP 2026
The draft policy sets ambitious per capita electricity consumption targets of 2,000 kWh by 2030 and over 4,000 kWh by 2047. It also aligns with India's climate commitments, including reducing emissions intensity by 45 per cent from 2005 levels by 2030 and achieving net-zero emissions by 2070. These targets aim to balance the growing power demand from industrial, commercial, and residential users with sustainability and renewable energy integration.
Q3. How does the NEP 2026 propose to address tariff and cross-subsidisation issues
The policy recommends linking tariffs to appropriate indices for automatic annual revisions if state commissions do not issue orders. It also advocates recovering fixed costs through demand charges to gradually reduce cross-subsidisation, which occurs when certain consumer groups pay higher tariffs to subsidise lower rates for others, such as agricultural or low-income households. These measures aim to make electricity pricing more transparent and cost-reflective while maintaining consumer fairness.
Q4. What structural and operational reforms are suggested in the draft policy
The NEP 2026 proposes unbundling state transmission utilities and creating independent entities to manage State Load Dispatch Centres (SLDCs) and transmission planning. It also recommends establishing a Distribution System Operator (DSO) to facilitate network sharing, integrate distributed renewables, energy storage, and vehicle-to-grid systems, and improve grid efficiency. For transmission, the policy suggests a utilisation-based allocation framework and regulatory measures to prevent speculative hoarding of connectivity rights.
Q5. How does the policy plan to support renewable and nuclear energy growth
The draft policy emphasises integrating renewable energy with storage solutions, repurposing older plants to support grid stability, and promoting emerging technologies. It also seeks stakeholder feedback on expanding nuclear energy capacity, including advanced modular reactors, small reactors, and commercial-industrial applications, aiming for a total nuclear capacity of 100 GW by 2047. These steps are intended to enhance energy security, diversify India's energy mix, and support sustainable development goals.
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