Electricity May Become Costlier: Government Releases Draft National Electricity Policy, Here’s What It Means

The central government has released the draft National Electricity Policy (NEP) 2026 for public consultation, aiming to prepare the country’s power sector for the future. Stakeholders across the industry have been invited to provide their suggestions on the draft.

New Focus on Nuclear Energy
The draft emphasizes moving away from coal-based thermal power and highlights nuclear energy as a potential alternative. This follows the recent implementation of the SHANTI Act, which opens up the nuclear sector to private companies. The draft outlines significant changes in India’s electricity policy and signals the government’s push for a more sustainable, reliable, and economically strong power sector.

Will Electricity Become More Expensive?
For the average consumer, the key concern remains whether electricity tariffs will rise in the future, especially in light of government schemes that provide subsidized or free electricity. While the draft does not provide direct answers, its provisions indicate potential changes.

The draft policy focuses on reducing losses faced by distribution companies (DISCOMs) and emphasizes nuclear energy, which could increase overall costs. It proposes linking tariffs to an appropriate index, allowing automatic annual revisions. Additionally, it recommends introducing demand charges to cover fixed costs, gradually reducing the subsidy burden across different consumer categories.

Key Highlights of the Draft Policy

• Once finalized, NEP 2026 will replace the existing policy from 2005.
• The government aims to increase per capita electricity consumption to 2,000 units by 2030 and 4,000 units by 2047.
• State-level resource adequacy plans will be prepared by DISCOMs and SLDCs, while the Central Electricity Authority (CEA) will develop a national plan.
• An index-linked automatic tariff revision mechanism is proposed to prevent revenue gaps when state regulators fail to revise tariffs on time.
• Manufacturing units, Indian Railways, and metro systems may be exempted from cross-subsidy charges and surcharges to enhance competitiveness and reduce logistics costs.
• The policy aims to reduce carbon intensity by 45% by 2030 and achieve net-zero emissions by 2070, promoting a shift to clean and low-carbon energy.
• Renewable energy expansion will be supported through market-based mechanisms and captive power plants, with a focus on grid stability and energy storage.
• Consumers will be allowed to trade surplus electricity from Distributed Renewable Energy (DRE) sources. By 2030, renewable and conventional energy sources will have equal standing.
• Following the provisions of the SHANTI Act 2025, the policy encourages advanced nuclear technologies, modular reactors, and small nuclear reactors, targeting 100 GW of nuclear capacity by 2047.

The draft NEP 2026 marks a strategic step toward transforming India’s power sector into a sustainable, financially robust, and technologically advanced system. While it emphasizes long-term environmental and economic benefits, consumers may see changes in tariff structures as these reforms are implemented.