Weeks after the government enacted the SHANTI Act to open India\u2019s nuclear sector to private players, a new draft National Electricity Policy (NEP) signals a clear policy shift \u2014 a strong pivot to nuclear power as a potential substitute for coal-based thermal generation.<\/p>\n
India continues to rely heavily on thermal power, with coal dominating not just grid-based electricity but also captive power used by industries. Against this backdrop, the draft policy seeks to recalibrate the country\u2019s power mix.<\/p>\n
Set to replace the two-decade-old NEP notified in 2005, the draft policy 2026 pushes for the adoption of advanced nuclear technologies, including Small Modular Reactors (SMRs), other small-capacity reactors, and direct use of nuclear power by commercial and industrial consumers.<\/p>\n
This push aligns with the government\u2019s ambition of scaling India\u2019s nuclear capacity to 100 GWe by 2047 \u2014 more than ten times the current installed capacity of 8.8 GWe \u2014 and builds on the SHANTI Act\u2019s removal of long-standing legal and regulatory barriers to private participation in the sector.<\/p>\n
At the same time, the draft policy proposes structural changes to improve the financial health of the power sector. It suggests an index-linked automatic tariff revision mechanism that would kick in if electricity regulators fail to revise tariffs on time, aimed at preventing revenue gaps for power utilities. It also proposes exemptions from cross-subsidy charges and surcharges for manufacturing units, Indian Railways and metro rail systems.<\/p>\n
The policy continues to back renewable energy expansion through market-based mechanisms and captive power plants, while placing greater emphasis on energy storage to ensure grid stability as variable renewable energy grows.<\/p>\n
NEP 2026: Fine prints<\/strong><\/p>\n The draft sets out ambitious demand-side targets, projecting per capita electricity consumption to rise to 2,000 kWh by 2030 and over 4,000 kWh by 2047, reflecting the scale of power demand expected from a growing economy. It ties this growth to India\u2019s climate commitments\u2014cutting emissions intensity by 45 percent from 2005 levels by 2030 and achieving net-zero emissions by 2070\u2014underscoring the need for a decisive shift towards low-carbon energy pathways.<\/p>\n Story continues below this ad<\/p>\n Beyond generation, the policy places a strong focus on the financial health of distribution companies (discoms).<\/p>\n \u201cNEP 2026 seeks to restore financial health of the DISCOMs by promoting cost-reflective tariffs, timely cost pass-through, and reduction of AT&C losses,\u201d the draft policy states.<\/p>\n It also proposes linking tariffs to a suitable index for automatic annual revision if no tariff order is issued by state electricity regulatory commissions. Currently, tariffs are determined by regulatory commissions using a cost-plus approach \u2014 covering generation, transmission and distribution costs along with a reasonable return \u2014 while factoring in consumer categories and policy considerations.<\/p>\n