SYLLABUS

GS-2: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Context: The government has released the new “Draft National Electricity Policy (NEP) 2026” for public consultation with stakeholders, marking a significant step towards transforming India's power sector

More on the News:

• The new policy, once finalised, intends to replace the existing NEP which was notified in 2005.

o 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. 

Key features of NEP 2026

• Objectives: 

• To raise per capita electricity consumption to 2,000 kWh by 2030 and beyond 4,000 kWh by 2047. 
• Aligns with India’s climate commitments, including reduction of emissions intensity by 45 percent below 2005 levels by 2030 and achievement of net-zero emissions by 2070, necessitating a decisive shift towards low-carbon energy pathways.

• Nodal Ministry: Ministry of Power

• Wide-ranging set of reforms: focus on Resource Adequacy (RA) which mandates decentralised advance planning, with DISCOMs and State Load Despatch Centres (SLDCs) preparing utility- and state-level RA plans in line with State Commission regulations.

o The Central Electricity Authority (CEA) will consolidate the utility- and state-level RA plans into a national-level plan to ensure overall adequacy of capacity.

• Renewable energy (RE) and Storage: 

• Emphasises market-based capacity addition, including captive power plants. 
• supports installation of storage systems by distribution licensees on behalf of small consumers to leverage economies of scale, while enabling bulk consumers to deploy their own storage to promote Distributed Renewable Energy (DRE).
• calls for accelerated development of storage-based hydroelectric projects to support flood moderation, irrigation, water security and energy security.

• For Thermal generation: integration of storage and repurposing of older plants to provide grid support and facilitate higher renewable integration. 

• It also suggests exploring direct use of steam from thermal plants for district cooling and industrial processes to improve overall efficiency.

• For Nuclear power: aligns with the SHANTI Act, 2025, proposing adoption of advanced nuclear technologies, development of modular and small reactors, and use of nuclear energy by commercial and industrial consumers, with a target of achieving 100 GW capacity by 2047.

• The SHANTI Act, 2025 (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act) is a new nuclear energy law in India that envisage a modern, unified statutory framework for the peaceful use and expansion of nuclear energy.

• Power market strengthening: emphasises a robust regulatory framework for monitoring and surveillance to prevent collusion, gaming and market dominance.

• Transmission: proposes adoption of advanced technologies and suitable compensation for land use to address Right of Way (RoW) challenges. Transmission tariff parity with conventional power for all new RE capacity by 2030 is envisaged, along with a utilisation-based framework for allocating transmission connectivity to prevent speculative holding.

• Distribution segment: 

• targets single-digit AT&C losses and promotes shared distribution networks to enhance competition and efficiency without duplicating infrastructure. 
• proposes establishment of a Distribution System Operator (DSO) to enable network sharing and integration of distributed renewables, storage and Vehicle-to-Grid (V2G) systems.
• Cities with populations above 10 lakh are to achieve N-1 redundancy at the distribution transformer level by 2032, with undergrounding of networks in congested areas.

• For grid operations: recommends functional unbundling of State Transmission Utilities and creation of independent state-level entities for SLDC operations and transmission planning, along with alignment of State Grid Codes with the Indian Electricity Grid Code.

• Cybersecurity and Data governance: proposes a robust cybersecurity framework, mandatory storage of power sector data within India, structured data-sharing mechanisms, and real-time visibility of distributed energy resources for DISCOMs and SLDCs.

• Technology & Skill Development: Transition to indigenously developed SCADA system by 2030 and development of domestic software solution for all critical applications in the power system.

Significance of NEP 2026

• 21st century power sector Architecture: The policy aims to ensure reliable, affordable and sustainable electricity for all while supporting the country's long-term economic growth and energy transition. 

• Roadmap for Sustainability: The Draft NEP 2026 provides a comprehensive blueprint for a future‑ready, financially viable and environmentally sustainable power sector to provide reliable and quality power at affordable price to meet the goals of Viksit Bharat @ 2047.

• Expanding Energy Basket: Along with reducing dependence on imported fossil fuels, the policy encourages a balanced energy mix with Renewables, Nuclear and Hydro energy.