NewsStocksDraft National Electricity Policy 2026 Unveiled: Government Proposes Clean Power Targets and Market ReformsDraft National Electricity Policy 2026 Unveiled: Government Proposes Clean Power Targets and Market Reforms
India's power ministry released draft National Electricity Policy 2026, targeting per capita consumption of 2,000 kWh by 2030 and over 4,000 kWh by 2047. The policy proposes structural reforms including automatic tariff revisions for distribution companies, reduced cross-subsidization, and exemptions for large industrial consumers. It emphasizes renewable energy deployment through market mechanisms, large-scale storage, and operational parity with conventional power by 2030, while scaling nuclear capacity to 100 GW by 2047.
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India's power ministry has released the draft National Electricity Policy (NEP) 2026, marking the first comprehensive policy update in nearly two decades since the existing framework was established in 2005. The policy outlines ambitious consumption targets and structural reforms aimed at supporting economic growth while addressing climate commitments.
Ambitious Consumption and Clean Energy Targets
The draft policy establishes significant milestones for electricity consumption growth to support India's expanding economy:
| Target Parameter: | Timeline | Details |
|---|---|---|
| Per Capita Consumption: | 2030 | 2,000 kWh (from 1,460 kWh in 2024-25) |
| Per Capita Consumption: | 2047 | Over 4,000 kWh |
| Emissions Intensity Reduction: | 2030 | 45% from 2005 levels |
| Net-Zero Target: | 2070 | Complete emissions neutrality |
To prevent capacity shortages, the policy mandates resource adequacy planning requiring distribution companies and State Load Dispatch Centres to prepare advance capacity plans. The Central Electricity Authority will coordinate national-level planning to ensure system-wide adequacy.
Distribution Sector Reforms and Tariff Restructuring
Addressing the financially stressed distribution segment, the policy proposes comprehensive reforms to tackle persistent issues of high losses and mounting debt. Key measures include automatic annual tariff revisions linked to an index when state regulators fail to issue tariff orders, ensuring regular price adjustments.
The policy recommends a gradual shift towards recovering fixed costs through demand charges to reduce cross-subsidization. To enhance industrial competitiveness, it proposes exempting manufacturing units, railways, and metro systems from cross-subsidies and surcharges, recognizing their impact on industrial power costs and logistics efficiency.
| Reform Area: | Proposed Changes |
|---|---|
| Tariff Revisions: | Automatic annual adjustments via index |
| Cost Recovery: | Shift to demand charges for fixed costs |
| Industrial Exemptions: | Manufacturing, railways, metro systems |
| Large Consumer Obligations: | Exemption from universal service (≥1 MW) |
Renewable Energy and Storage Deployment
The draft emphasizes aggressive renewable capacity addition through market-based mechanisms and captive power plants, coupled with large-scale energy storage deployment. Storage installation by distribution companies will benefit small consumers through economies of scale, while bulk consumers can invest directly in storage solutions.
Consumers will gain rights to trade surplus renewable power and storage capacity through peer-to-peer transactions or aggregators. The policy targets operational parity between renewable and conventional power in scheduling and deviation norms by 2030, ensuring grid stability as renewable penetration increases.
Conventional Power and Nuclear Expansion
While prioritizing renewables, the policy retains strategic roles for conventional sources. Older thermal plants will be repurposed for grid support services, while hydropower development will accelerate with storage-based projects. Nuclear power expansion represents a cornerstone of long-term planning, with scaling targets reaching 100 gigawatts by 2047, including deployment of modular and small reactor technologies.
| Power Source: | Strategic Role |
|---|---|
| Thermal Plants: | Repurposed for grid support |
| Hydropower: | Accelerated storage-based development |
| Nuclear Power: | Scale to 100 GW by 2047 |
| Battery Storage: | Market-based deployment with manufacturing incentives |
Grid Modernization and System Resilience
Additional measures focus on strengthening grid infrastructure and operational efficiency. The policy mandates stricter power market surveillance, transmission pricing reforms, and efforts to reduce distribution losses to single-digit levels. Cybersecurity enhancement through mandatory domestic storage of power sector data will strengthen system resilience against emerging threats.
The comprehensive policy framework represents a significant shift towards market-oriented mechanisms while maintaining regulatory oversight to ensure universal access and system reliability. Implementation success will depend on coordination between central and state authorities, regulatory consistency, and industry adaptation to proposed structural changes.
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