Power ministry seeks stakeholder comments on draft National Electricity Policy 2026
The Ministry of Power on Wednesday sought stakeholder comments on the draft National Electricity Policy (NEP) 2026, which aims to address high losses and debt of discoms, non-cost-reflective tariffs, and high cross-subsidisation.A non-cost-reflective tariff is a pricing structure in which the rate charged to a particular consumer category is below the utility’s average cost of generating, transmitting, and distributing electricity to that category.
While cross-subsidisation is a pricing mechanism in which certain consumer groups (industrial, commercial, and higher-income domestic users) are charged tariffs above the cost of supply to offset and subsidise the lower tariffs provided to other groups, such as agricultural consumers and low-income households. The draft also seeks to foster competition, ensure grid resilience to integrate increased shares of variable renewable energy, and provide consumer-centric services with demand-side interventions, the Ministry said in a statement.The comments are to be submitted within 30 days.
The Ministry said that despite several achievements made since 2005, the power sector still has challenges, especially in the distribution segment.
“Persistent challenges remain, particularly in the distribution segment, such as high accumulated losses and outstanding debt.“Tariffs in several segments remain non-cost-reflective, and high cross-subsidisation has resulted in elevated industrial tariffs, adversely affecting the global competitiveness of Indian industry,” the Ministry said.
Against this backdrop, the Draft NEP 2026 sets ambitious yet necessary goals. The Policy targets per capita electricity consumption of 2,000 kWh by 2030 and over 4,000 kWh by 2047.
It also aligns with India’s climate commitments, including reducing emissions intensity by 45 per cent below 2005 levels by 2030 and achieving net-zero emissions by 2070, necessitating a decisive shift towards low-carbon energy pathways. The NEP 2026 outlines strategies to overcome these challenges and achieve the stated objectives. For resource adequacy, it said DISCOMs and State Load Dispatch Centres (SLDCs) shall prepare Resource Adequacy (RA) plans at the utility and state levels, in accordance with the regulations of state commissions. Central Electricity Authority (CEA) will prepare a corresponding national plan to ensure adequacy at the national level.The policy also focuses on cybersecurity, technology adoption, and skill development.
On grid operations, it proposed for functional unbundling of state transmission utilities (STUs) and creation of independent state-level entities to manage SLDC operations and transmission planning functions.
The draft said that tariffs must be linked to a suitable index for automatic annual revision, which operates if no tariff order is passed by the state commission.
Tariffs should progressively recover fixed costs through demand charges to avoid cross-subsidisation, it said.To support discoms, it has proposed establishing a distribution system operator (DSO) to facilitate network sharing and the integration of distributed renewables, storage, and vehicle-to-grid (V2G) systems.In transmission, it has suggested a utilisation-based framework for allocation of transmission connectivity, along with appropriate regulatory mechanisms to ensure optimal use and prevent speculative holding of connectivity.
A strong regulatory framework must be in place to support market monitoring and surveillance to prevent collusion, gaming, or market dominance, the draft said. The draft also proposed integrating storage and repurposing older units for grid support to enable greater renewable energy integration.
The draft has also sought comments on the adoption of advanced nuclear technologies, the development of Modular Reactors, the setting up of Small Reactors, and the use of nuclear energy by commercial and industrial consumers to achieve a 100 GW nuclear capacity target by 2047.
The first National Electricity Policy, notified in February 2005, addressed fundamental challenges of the power sector, including demand-supply deficits, limited access to electricity, and inadequate infrastructure.
