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Draft National Electricity Policy 2026

ICICIdirect Research 25 Sep 2026 DISCLAIMER

NEP 2026 moves to Cabinet: Power Ministry has moved the Draft National Electricity Policy (NEP) 2026 to the Union Cabinet for inter-ministerial consultation after incorporating stakeholder comments. The policy targets financial turnaround and commercial viability, reliable 24x7 power supply and competitive electricity prices.
Power demand to structurally rise: The draft targets per-capita electricity consumption of 2,000 kWh by 2030 and >4,000 kWh by 2047 vs per-capita electricity consumption of 1,460 kWh in FY25, implying ~37% growth by 2030 and ~2.7x from FY25 levels by 2047. It is aligned with the Viksit Bharat @ 2047 objective and anticipates a significant rise in electricity consumption as the economy expands.  
RE integration drives grid capex: India already has around 300 GW of non-fossil capacity, while Variable Renewable Energy (VRE) accounts for around 37% of installed generation capacity. By 2047, the draft expects >80% of installed capacity and ~two-thirds of generation to come from non-fossil sources, necessitating major investments in transmission, grid flexibility and storage. 
Transmission: India’s 220 kV+ transmission network stood at 5.09 lakh ckm as of June 2026 and is planned to reach 6.48 lakh ckm by 2032 — an addition of 1.39 lakh ckm (~27%). Transformation capacity is targeted to increase from 1,478 GVA to 2,345 GVA, while inter-regional transfer capacity rises from 120 GW to 168 GW. The policy proposes rolling 5-year detailed and 10-year perspective transmission plans, with CTU/STUs incorporating generation growth, GNA demand, congestion, redundancy and RoW constraints. It also calls for plug-and-play substations, pre-built bays in high-demand/industrial zones and faster connection approvals.


DISCOM / distribution:

  • National AT&C losses have already declined from 21.91% in FY21 to 15.04% in FY25. Under NEP 2026, states are expected to target single-digit AT&C losses, supported by smart metering, energy accounting, and stronger distribution infrastructure.
  • Shared distribution network: A key structural reform is the proposal to phase out the distribution monopoly by allowing multiple players to operate in the same area using shared distribution infrastructure. This is intended to increase competition without requiring duplication of the existing network.
  • Tariff reform: From FY27, State Commissions are proposed to ensure tariffs fully reflect the cost of service, with automatic annual revision if tariff orders are not passed. Power-purchase cost increases are proposed to be automatically passed through monthly. 

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