Power Ministry releases Draft National Electricity Policy 2026

The Ministry of Power (MoP) has published the Draft National Electricity Policy (NEP) 2026, outlining a strategic roadmap to ensure a reliable, affordable power supply, enhance the financial sustainability of utilities, and align with India’s climate goals and vision to become a developed nation by 2047.

The draft policy, issued under the Electricity Act, 2003, is a comprehensive revision of the National Electricity Policy notified in 2005. It notes progress in universal electrification and grid integration. It also flags unresolved issues, including the financial stress of distribution companies (DISCOMs) and the challenge of integrating large-scale renewable energy.

A key objective is ensuring resource adequacy through decentralised planning. The Central Electricity Authority (CEA) will prepare national-level plans. State Load Dispatch Centres (SLDCs) and DISCOMs will prepare state and utility-level plans to ensure a reliable 24×7 power supply.

On financial viability, the policy stresses cost-reflective tariffs, timely regulatory orders, and a phased reduction in cross-subsidies. It proposes exempting manufacturing industries, Indian Railways, and Metro Railways from cross-subsidy charges to improve industrial competitiveness. States are expected to achieve single-digit Aggregate Technical and Commercial (AT&C) losses and complete the solarisation of all agriculture feeders by 2030.

The generation strategy focuses on expanding non-fossil fuel capacity, including solar, wind, hydro, and nuclear power, in line with India’s climate goals. It calls for renewable energy projects closer to load centres, supported by energy storage, promotion of peer-to-peer power trading, and achieving grid parity for renewables in scheduling by 2030. Coal-based power is reaffirmed as critical for baseload requirements, with emphasis on improving flexibility and efficiency of existing plants.

The draft policy proposes deeper power market development through instruments such as bilateral contract settlements and capacity markets. It also highlights the need for a more flexible transmission system, with competitive bidding as the preferred route for project development and greater attention to strengthening intra-state transmission networks.

For the distribution sector, the policy outlines steps to reduce costs, introduce competition, and accelerate smart meter deployment. It proposes the creation of Distribution System Operators (DSOs) to improve network management and calls for strict service quality norms, including compensation to consumers for service failures.

Other focus areas include strengthening grid operations and cybersecurity, creating robust data-sharing frameworks, promoting domestic manufacturing under Make in India, and rolling out structured skill development programmes. The policy also addresses energy efficiency, disaster management, and the mobilisation of large-scale financing needed for power sector expansion.

The Ministry of Power has sought comments on the draft to be submitted within 30 days of the issuance of the letter, as indicated on the document cover sheet.

The featured photograph is for representation only.