The Ministry of Power has released the Draft National Electricity Policy (NEP) 2026, set to replace the 2005 framework. While the 2005 policy focused on promoting access , the 2026 policy focuses on viability, grid resilience and promoting more choice for consumers.
For businesses, this document signals that the prosumer is going to soon enter the market. Here’s a breakdown of the specifics businesses should pay attention to.
Overview
Aligned with the vision of Viksit Bharat @2047, the policy sets aggressive targets to decarbonise the grid while ensuring energy security. The aim is to achieve 50% non-fossil capacity by 2030 and 80% by 2047. In a major shift, the policy targets 100 GW of nuclear capacity by 2047, leveraging the SHANTI Act, 2025 to allow private participation and Small Modular Reactors (SMRs) for commercial use. Coal remains the baseload anchor but must pivot to flexible operations to support renewables. It also directs states and DISCOMs to make Open Access available in a non-discriminatory manner, in line with the Electricity Act 2003 to allow efficient generation location decisions, promote electricity trading, and reduce overall system costs.
Tariff Reforms
To prevent revenue gaps, tariffs will now be linked to an index. If State Regulators fail to issue tariff orders on time, tariffs will increase automatically, eliminating the delay that historically created unpaid dues to DISCOMs. In a landmark move, consumers with >1 MW load may be exempted from Universal Service Obligations (USO). This could effectively remove cross-subsidy surcharges for large manufacturing units, significantly boosting industrial competitiveness. DISCOMs are mandated to target single-digit AT&C losses, pushing for operational efficiency over tariff hikes.
Separation of Carriage and Content
The policy explicitly targets the monopoly structure of electricity distribution, proposing a separation of carriage (infrastructure) from content (supply). The policy pushes for allowing multiple distribution licensees in the same area, giving consumers the power to choose their electricity supplier, similar to mobile networks and European energy markets. It mandates the creation of independent Distribution System Operators (DSO) to manage grid stability at the local level, separating the neutral operation of the grid from the commercial interests of the DISCOM. State Transmission Utilities (STUs) will be functionally unbundled to create independent entities for load dispatch (SLDC) and planning, ensuring fairer access for private generators.
Grid Resilience & Technology
As renewable penetration increases, the grid must transform to an active, intelligent network. BESS (Battery Energy Storage Systems) and Pumped Storage Projects (PSP) are classified as essential. The policy mandates Viability Gap Funding (VGF) for strategic hydro and storage projects. The policy introduces the concept of Cloud Energy Storage—a model where consumers can lease storage capacity on-demand without owning the physical asset, similar to cloud computing. A mandatory transition to indigenous SCADA systems by 2030 is proposed. To combat cyber threats, a dedicated CSIRT-Power (Computer Security Incident Response Team) will be established.
The Prosumer Economy & New Market Systems
The policy acknowledges that the future grid is decentralised. The document promotes P2P trading and aggregators who can pool rooftop solar from thousands of small homes or offices to sell as a block to the grid. The policy formally promotes VPPAs, allowing corporates to procure green attributes without physical delivery constraints. It codifies a mandate for 24×7 supply and proposes automatic compensation for power failures, enforcing accountability.
We believe that for Cloud Energy Storage to work, we need a Virtual Power Plant Frameworkthat defines how a consumer in Mumbai can lease storage in Rajasthan without paying prohibitive wheeling charges, unlocking true value. The Draft NEP 2026 is a pro-market, pro-technology pivot. For businesses, the potential removal of cross-subsidy surcharges and the introduction of choice in suppliers could be game-changing.
At Neufin, we are constantly decoding these regulatory shifts to help businesses get the most competitive tariffs and accelerate their energy transition.
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