In a move to modernize the power sector for the future, ensure financial sustainability, and promote environmental responsibility, the government has unveiled the ‘Draft National Electricity Policy (NEP) 2026’ for public feedback. The policy aims to revamp the power industry to align with the vision of Viksit Bharat by 2047, setting ambitious targets for per capita electricity consumption.
The Draft NEP 2026 is designed to enhance the power sector’s efficiency while meeting India’s climate goals, such as reducing emissions intensity by 45% by 2030 and achieving net-zero emissions by 2070. This policy shift emphasizes the transition to low-carbon energy sources to combat climate change effectively.
Once finalized, the new policy will replace the existing NEP from 2005, with a focus on decentralized planning for capacity expansion. It mandates DISCOMs and SLDCs to prepare Resource Adequacy plans at utility and state levels to ensure sufficient power generation capacity.
Furthermore, the policy proposes linking tariffs to an appropriate index for automatic annual adjustments in the absence of tariff orders from State Commissions. It advocates for a gradual recovery of fixed costs through demand charges to prevent cross-subsidization among different consumer categories.
To enhance economic competitiveness and reduce logistics costs, the policy suggests exempting manufacturing industries, railways, and metro railways from cross-subsidies and surcharges. It also recommends streamlining dispute resolution mechanisms to ease the burden on Regulatory Commissions and expedite conflict resolution.
Regarding renewable energy, the policy encourages market-based mechanisms and captive power plants for capacity additions. It promotes the installation of storage facilities by distribution licensees to support small consumers and facilitate the adoption of Distributed Renewable Energy sources.
In line with the SHANTI Act, 2025, the policy advocates for the adoption of advanced nuclear technologies, Modular Reactors, and Small Reactors to achieve 100 GW of nuclear energy by 2047. The Draft NEP 2026 aims to build on the progress made in India’s power sector since 2005, offering a comprehensive strategy to deliver reliable and affordable electricity.
