Draft NEP Proposes Automatic Tariff Revision, Pushes For Nuclear Power

(MENAFN- KNN India) New Delhi, Jan 23 (KNN) The Ministry of Power on Wednesday released the Draft National Electricity Policy (NEP) 2026 providing for automatic annual revision in tariff.

Available for public feedback, the proposed policy seeks to replace the 2005 framework.

The ministry said that while issues of power access and shortages have largely been addressed, challenges persist in distribution efficiency, tariff rationalisation and the financial health of power utilities.

Demand Growth and Climate Commitments

The draft projects per capita electricity consumption rising to 2,000 kWh by 2030 and over 4,000 kWh by 2047, from 1,460 kWh in 2024–25. It aligns with India's climate goals, including a 45 per cent reduction in emissions intensity from 2005 levels by 2030 and net-zero emissions by 2070, requiring a shift to low-carbon energy.

Tariffs and Distribution Reforms

NEP 2026 proposes automatic annual tariff revisions if regulators delay tariff orders, greater recovery of fixed costs through demand charges, and tariffs that fully reflect costs without regulatory assets.

It discourages free power and calls for subsidies to be paid upfront. To reduce cross-subsidies, it proposes exempting manufacturing units, railways and metro systems from certain surcharges.

The draft stresses distribution reforms, including reducing AT&C losses to single digits, enabling shared networks, creating a Distribution System Operator, ensuring N-1 redundancy in major cities, and undergrounding networks in congested urban areas. It reiterates the Electricity Act's intent to end monopoly distribution through multiple players, PPPs and listing of utilities.

Generation Mix and Nuclear Push

The policy prioritises renewables, market-based capacity addition, large-scale battery and pumped storage, parity in scheduling of renewable and conventional power by 2030, and peer-to-peer renewable trading.

Coal-based power is expected to remain vital for grid stability, with proposals to repurpose older plants for grid support, storage integration and alternative industrial uses.

In line with the SHANTI Act, 2025, the draft targets 100 GW of nuclear capacity by 2047, including small modular and advanced reactors, and allows private participation for captive and industrial use.

Transmission, Markets and Risks

Proposed measures include parity in transmission tariffs for new renewable capacity by 2030, checks on speculative holding of connectivity, stronger market surveillance, mandatory domestic data storage, a robust cybersecurity framework, and a shift to indigenous SCADA systems and software by 2030.

(KNN Bureau)

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