Draft National Electricity Policy 2026 Charts India’s Tech-Driven Power Future

In line with the SHANTI Act, 2025, the policy supports advanced nuclear technologies, Small and Modular Reactors, and commercial nuclear use—targeting 100 GW of nuclear capacity by 2047.

The Ministry of Power has released the Draft National Electricity Policy (NEP) 2026, laying out a sweeping, technology-forward roadmap to transform India’s power sector in line with the national vision of Viksit Bharat @2047. Once finalised, the policy will replace the existing NEP notified in 2005, reflecting two decades of structural change, digitalisation, and clean energy transition in the sector.

From Power Deficits to a National Grid Economy

The first NEP of 2005 focused on overcoming shortages, limited access, and weak infrastructure. Since then, India’s electricity sector has undergone a dramatic transformation:

• Installed generation capacity has quadrupled, with strong private sector participation

• Universal electrification was achieved by March 2021

• A unified national grid became operational in 2013

• Per capita electricity consumption reached 1,460 kWh in 2024–25

• Power exchanges and markets now enable flexible, efficient procurement nationwide

Despite this progress, structural challenges persist—especially in distribution, where high AT&C losses, accumulated debt, and non–cost-reflective tariffs continue to constrain competitiveness and investment.

Ambitious Targets Anchored in Climate Commitments

Against this backdrop, Draft NEP 2026 sets clear, measurable goals:

• 2,000 kWh per capita consumption by 2030

• Over 4,000 kWh per capita by 2047

The policy aligns power sector growth with India’s climate commitments, including:

• 45% reduction in emissions intensity by 2030 (from 2005 levels)

• Net-zero emissions by 2070

This necessitates a decisive shift toward low-carbon generation, storage, digital grids, and market-based mechanisms.

What’s New: Key Policy Interventions

Resource Adequacy (RA)DISCOMs and SLDCs will prepare decentralised, forward-looking RA plans, aligned with State Commission regulations, while the CEA will develop a national adequacy plan—introducing system-level predictability into capacity planning.

Financial Viability & Competitiveness

• Automatic annual tariff revision linked to suitable indices

• Progressive recovery of fixed costs through demand charges

• Removal of cross-subsidies and surcharges for manufacturing, railways, and metro systems

• Faster dispute resolution mechanisms to reduce regulatory and consumer burden

• Potential exemption from Universal Service Obligation for large consumers (≥1 MW)

Renewable Energy, Storage & P2P Markets

• Market-based RE capacity addition and captive generation

• Utility-scale storage deployment for small consumers; self-owned storage for bulk users

• Peer-to-peer (P2P) trading of surplus energy and storage via aggregators

• Parity between RE and conventional power in scheduling and deviation by 2030

• Market-led deployment of Battery Energy Storage Systems (BESS), with incentives such as VGF and a strong push for domestic manufacturing

Thermal Power Reimagined

• Integration of storage and repurposing of older units for grid stability

• Exploring direct use of thermal steam for district cooling and industrial processes

Nuclear Power at Scale

In line with the SHANTI Act, 2025, the policy supports advanced nuclear technologies, Small and Modular Reactors, and commercial nuclear use—targeting 100 GW of nuclear capacity by 2047.

Hydro & Pumped Storage

Accelerated development of storage-based hydro projects to support energy security, flood moderation, irrigation, and grid flexibility.

Power Markets & Transmission

• Stronger market surveillance to prevent gaming and dominance

• Advanced transmission technologies and improved RoW compensation

• Transmission tariff parity for RE by 2030

• Utilisation-based allocation of transmission connectivity to curb speculation

Distribution Reforms at the Edge

• Targeting single-digit AT&C losses

• Shared distribution networks to enhance competition and efficiency

• Creation of a Distribution System Operator (DSO) to manage DERs, storage, and Vehicle-to-Grid (V2G) integration

• N-1 redundancy at transformer level in all cities above 10 lakh population by 2032, with undergrounding in congested zones

Grid Operations, Cybersecurity & Data

• Functional unbundling of STUs and independent SLDC operations

• Alignment with the Indian Electricity Grid Code

• Mandatory data localisation, robust cybersecurity frameworks, and structured data sharing

• Real-time visibility of Distributed Energy Resources for DISCOMs and SLDCs

Technology & Skills

• Transition to indigenous SCADA systems by 2030

• Development of domestic software for all critical power system applications

A Call to Innovators, Utilities, and Investors

Draft NEP 2026 positions India’s power sector as a digital, market-driven, storage-enabled ecosystem, opening unprecedented opportunities for grid-tech startups, storage providers, energy software firms, cybersecurity companies, equipment manufacturers, and global investors.

With consultation now open, the policy invites early adopters and innovators to shape—and scale within—India’s next-generation electricity system.