Draft National Electricity Policy (NEP), 2026

Draft National Electricity Policy (NEP) 2026 outlines India’s roadmap for affordable, reliable, and sustainable power, focusing on renewable energy integration, grid modernization, energy security, and net-zero targets.

Table of Contents

Context

The Ministry of Power has released the Draft National Electricity Policy (NEP), 2026 for public consultation, aiming to transform India’s power sector in line with the vision of Viksit Bharat @2047, and to replace the existing National Electricity Policy, 2005.

Key Features of Draft NEP 2026

Resource Adequacy (RA): DISCOMs and SLDCs will prepare decentralised resource adequacy plans at state and utility levels, while the CEA will formulate a national-level plan to ensure overall capacity sufficiency.
Financial Viability & Economic Competitiveness: Tariffs will be linked to suitable indices for automatic annual revision, with progressive recovery of fixed costs through demand charges to reduce cross-subsidisation and improve industrial competitiveness.
Rationalisation of Cross-Subsidies: Cross-subsidy and surcharge exemptions are proposed for manufacturing, railways, and metro railways to lower logistics costs and enhance global competitiveness of Indian industry.
Distribution Sector Reforms: Regulatory Commissions may exempt large consumers (≥1 MW load) from Universal Service Obligation, alongside measures to strengthen dispute resolution and reduce regulatory and consumer burdens.
Renewable Energy Generation & Storage: Renewable capacity addition will be promoted through market-based mechanisms, captive plants, peer-to-peer energy trading, and large-scale deployment of storage, including Battery Energy Storage Systems (BESS).
Grid Parity for Renewables: Parity between renewable and conventional energy sources in scheduling and deviation mechanisms is targeted to be achieved by 2030.
Thermal Power Transition: Thermal plants will integrate storage solutions and repurpose older units for grid support, while exploring direct use of steam for district cooling and industrial applications.
Nuclear Energy Expansion: In line with the SHANTI Act, 2025, advanced nuclear technologies, including Small Modular Reactors, will be promoted to achieve 100 GW of nuclear capacity by 2047.
Hydropower Development: The policy emphasises accelerated development of storage-based hydro projects to support flood moderation, irrigation, and long-term energy security.
Power Market Strengthening: A robust regulatory framework for market monitoring and surveillance will be established to prevent collusion, gaming, and abuse of market dominance.
Transmission Sector Reforms: The Draft NEP proposes adoption of advanced technologies, resolution of Right of Way issues, parity of transmission tariffs for renewables by 2030, and utilisation-based allocation of transmission connectivity.
Distribution Network Modernisation: Measures include achieving single-digit AT&C losses, shared distribution networks, creation of a Distribution System Operator (DSO), and N-1 redundancy in large cities.
Grid Operations: Functional unbundling of State Transmission Utilities and alignment of State Grid Codes with the Indian Electricity Grid Code are proposed to improve efficiency and reliability.
Cybersecurity and Data Sovereignty: A robust cybersecurity framework is mandated, with compulsory domestic storage of power sector data to ensure system resilience and data sovereignty.