- Why in news
- On 21 January 2026, the Ministry of Power released the Draft National Electricity Policy (NEP) 2026 for public consultation. Once final, it will replace the NEP notified in 2005.
- What it is
- The National Electricity Policy is the Centre's guiding policy for the power sector, framed under the Electricity Act, 2003. The first one was notified in 2005 to tackle shortages, low access and weak infrastructure. The 2026 draft reworks it for distribution reform, renewables, storage, nuclear power and grid operations.
- Policy it replaces
- The first NEP was notified in February 2005; the draft will replace it once finalised.
- Climate alignment
- Emissions intensity 45% below 2005 levels by 2030 and net-zero by 2070.
- Resource adequacy planning
- DISCOMs and SLDCs prepare RA plans at utility and state levels. CEA prepares the national plan.
- Nuclear goal
- The draft links nuclear expansion to the SHANTI Act, 2025, aiming for 100 GW by 2047.
- Distribution reforms
- It proposes a Distribution System Operator and N-1 redundancy in cities above 10 lakh population by 2032.
Don’t confuse with National Electricity Policy vs Electricity Act, 2003: The Act is the law; the NEP is a policy framed under Section 3 of the Act to guide planning and regulation.
Don’t confuse with SLDC vs CEA: SLDCs run grid operations at state level; CEA is the central technical body that plans nationally.
Schemes: 52 Prelims questions since 2013, 10 in Prelims 2026 alone. They test features, the period and who funds it. In Mains, 33 news-triggered questions, mostly GS3.
Why it matters
- Seeks to fix distribution finances through cost-reflective tariffs and lower AT&C losses.
- Lowering cross-subsidies on industry and railways can improve competitiveness and logistics costs.
- Supports energy transition through storage, RE parity and nuclear expansion, in line with the 2070 net-zero goal.
Problems
- Electricity is a Concurrent List subject, so State Commissions and DISCOMs must adopt the reforms; states may resist.
- Cutting cross-subsidies can raise tariffs for farm and household consumers, which is politically difficult.
- Debt-laden DISCOMs and right-of-way delays for transmission could slow execution.
Way forward
- Tie central support to measurable DISCOM performance and timely tariff orders.
- Build consensus with states during consultation and give targeted direct subsidies instead of cross-subsidies.
- Speed up storage and transmission projects with clear land compensation rules.
Put in your answer
Distribution stress: Distribution still has high accumulated losses and outstanding debt, and non-cost-reflective tariffs.
Grid unification: A unified national grid became operational in December 2013.
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UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Statements
Ours, not from a UPSC paper
Consider the following statements:
- 1.The Draft National Electricity Policy 2026 is intended to replace the National Electricity Policy notified in 2005.
- 2.The draft proposes that the Central Electricity Authority prepare the national resource adequacy plan, while DISCOMs and SLDCs prepare plans at utility and state levels.
- 3.The draft proposes N-1 redundancy at distribution transformer level in all cities with population above 10 lakh by 2030.
Which of the statements given above is/are correct?
True or false?
1 of 5
Statements the way Prelims prints them. Say first, then see the fact.
1.The draft targets per capita electricity consumption of 2,000 kWh by 2030 and over 4,000 kWh by 2047.
True. 2,000 kWh by 2030 and over 4,000 kWh by 2047.
2.Under the draft, the Central Electricity Authority prepares the national resource adequacy plan, while DISCOMs and SLDCs prepare plans at utility and state levels.
True. CEA prepares the national plan; DISCOMs and SLDCs prepare utility and state plans.
3.The draft proposes that cross-subsidies and surcharges be exempted for agricultural and domestic consumers.
False. Exemption is proposed for manufacturing industry, railways and metro railways.
4.The draft proposes mandatory storage of power sector data within India.
True. Power sector data must be stored in India for data sovereignty and resilience.
5.The Electricity Act, 2003 requires the Centre to notify a National Electricity Policy in consultation with State Governments and the Central Electricity Authority.
True. Section 3 of the Electricity Act, 2003 provides for the National Electricity Policy.
Written by us from the release, not by UPSC; checked by a second model.
Mains practice
15 marks · 250 words
The Ministry of Power has released the Draft National Electricity Policy 2026 to replace the 2005 policy. Examine the key provisions of the draft for distribution reform, renewables and storage, and grid operations. Discuss the challenges in implementing them and suggest a way forward.
Worth revising until Prelims 2027: most news questions come within two years of the event.