In a move signalling broad reforms in the power sector, the Ministry of Power released the Draft National Electricity Policy (NEP) 2026 on 21 January 2026, inviting feedback from stakeholders to improve the sector’s financial stability, commercial viability, and long-term sustainability.
The draft policy outlines wide-ranging measures to modernise India’s electricity ecosystem and align it with national development priorities, including the vision of Viksit Bharat @ 2047. It proposes replacing the existing policy notified in 2005 and introduces updated frameworks to address rising electricity demand, persistent stress in distribution utilities, and evolving climate commitments.
A central focus of NEP 2026 is improving the financial health of power utilities. To curb losses and ensure economic sustainability, the policy recommends linking electricity tariffs to a suitable index. This would allow tariffs to be automatically revised annually if state regulators delay decisions, promoting cost-reflective pricing and helping distribution companies better manage debt.
The draft also stresses the need to rationalise cross-subsidies that currently raise industrial power tariffs. Such measures are expected to improve competitiveness while creating a more predictable pricing environment. Proposed regulatory reforms aim to strengthen transparency and fair competition across the sector.
Beyond financial restructuring, NEP 2026 sets ambitious targets for electricity consumption and clean energy adoption. It proposes increasing per capita electricity consumption to 2,000 kWh by 2030 and to over 4,000 kWh by 2047, reflecting expected growth in industrial and economic activity. The policy supports a shift towards low-carbon energy pathways, aligning with national climate goals of reducing emissions intensity by 45% from 2005 levels by 2030 and achieving net-zero emissions by 2070.
To enable these objectives, the draft calls for decentralised resource planning by distribution companies and state load dispatch centres. The Central Electricity Authority would prepare a national resource adequacy plan. Other proposals include scaling up renewable capacity through market-based mechanisms, promoting energy storage solutions, and further rationalising cross-subsidies to reduce power costs for industry.
The government has invited comments from industry participants, regulators, and the public before finalising the policy. The consultation process is seen as a key step towards building a resilient, affordable, and sustainable electricity system for India’s future.
Also read: Viksit Workforce for a Viksit Bharat
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