Draft National Electricity Policy 2026 Charts Power Sector Roadmap

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The Ministry of Power has placed the Draft National Electricity Policy (NEP) 2026 in the public domain, inviting feedback on a long-term strategy to reshape India’s power sector in line with the Viksit Bharat @2047 vision. After approval, the new policy will supersede the National Electricity Policy issued in 2005, acknowledging the far-reaching technological, institutional, and market changes that have occurred since then.

Two Decades of Progress and Persisting Gaps

Since 2005, India’s power sector has expanded rapidly, with installed generation capacity increasing almost four times, supported by growing private sector involvement. Milestones achieved include nationwide household electrification by March 2021, the formation of a single national electricity grid in 2013, and a rise in per capita electricity consumption to approximately 1,460 kWh in 2024–25. However, the distribution segment remains a key area of concern, marked by financial stress in DISCOMs, high cumulative losses, tariff structures that fall short of cost recovery, and extensive cross-subsidisation.

Demand Growth and Climate Alignment

The Draft NEP 2026 sets out ambitious consumption benchmarks, targeting per capita electricity use of 2,000 kWh by 2030 and exceeding 4,000 kWh by 2047. These projections are aligned with India’s climate objectives, including a 45 per cent reduction in emissions intensity from 2005 levels by 2030 and the goal of net-zero emissions by 2070. The policy framework aims to harmonise economic growth, energy affordability, and environmental responsibility.

End-to-End Sector Reforms

Proposed measures span the entire electricity value chain. The draft calls for forward-looking resource adequacy planning by DISCOMs and State Load Despatch Centres, backed by a national plan prepared by the Central Electricity Authority. On the financial front, it recommends automatic annual tariff adjustments, a greater shift towards demand-based pricing, and a gradual reduction in cross-subsidies, particularly for industrial users, railways, and metro services. It also promotes large-scale renewable energy deployment, battery energy storage systems, peer-to-peer electricity trading, and equal treatment of renewable and conventional power in scheduling by 2030.

Future Generation Mix and Grid Readiness

The policy envisages expanding nuclear power capacity to 100 GW by 2047, including the adoption of small and modular reactors. It also prioritises faster development of storage-linked hydropower projects and the integration of energy storage with thermal generation. In addition, the draft outlines reforms in electricity markets, transmission pricing mechanisms, and distribution infrastructure, along with enhanced grid cybersecurity and domestic manufacturing of critical systems such as SCADA by 2030.

According to the Ministry of Power, the Draft NEP 2026 offers a forward-looking, financially resilient, and environmentally sustainable pathway to ensure dependable and affordable electricity for India’s future, and stakeholders have been encouraged to submit their views before the policy is finalised.

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