Govt Unveils Draft National Electricity Policy 2026

• The National Electricity Policy 2026 aims for cost-reflective tariffs and automatic annual revisions to improve discom finances
• It targets 2,000 kWh per capita by 2030 and promotes renewable and nuclear energy integration
• The policy outlines reforms, including shared distribution networks and financial strategies requiring ₹50 lakh crore by 2032

The government has introduced its draft National Electricity Policy 2026 which represents a substantial revision of the original policy document from 2005 after nearly two decades.

The policy establishes new rules for determining power tariffs while it introduces extensive structural reforms which will improve financial stability for distribution companies and establishes methods for funding operations.

The document provides a comprehensive approach to all aspects of electricity generation and transmission that will support India’s objectives for building a developed nation.

The policy aims to boost electricity usage from its current level of 1460 kilowatt hours in fiscal year 2025 to reach 2000 kilowatt hours by 2030 and 4000 kilowatt hours by 2047. It requires state regulators to maintain tariff discipline which will ensure that actual costs determine tariff rates while avoiding the creation of regulatory assets.

It includes a provision for automatic tariff changes which will occur every year based on a suitable index when state regulators do not implement tariff orders before the beginning of the new financial year.

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The policy addresses the financial problems that discoms face because previous bailouts did not succeed. The policy requires utilities to establish transparent tariff systems which accurately reflect operational costs while lowering cross-subsidization and implementing different rates for peak usage times.

Exemptions from cross-subsidies are suggested for critical sectors like manufacturing, Indian Railways, and metro rails to maintain their competitiveness.

The policy establishes a future state which includes shared distribution networks together with a distribution system operator and a risk-sharing system for generation and transmission projects. The project aims to establish a nuclear and renewable energy system which includes improved forecasting capabilities and mandatory consumption requirements.

 The organization establishes a financial roadmap which requires the power sector to obtain ₹50 lakh crore by 2032 and ₹200 lakh crore by 2047 while developing project financing methods through risk-mitigation tools and climate finance.