FEEDERS FOR FEEDERS. The draft electricity policy seeks to create more dedicated power lines for farms | Photo Credit: shaunl

Much water has flowed under the bridge since the government unveiled its first National Electricity Policy in 2005.

Against a vastly altered backdrop — rising renewable energy, storage, distributed generation, electricity markets and cybersecurity concerns — the Ministry of Power released, in January, the Draft National Electricity Policy, 2026 (not to be confused with the National Electricity Plan 2023–32 of the Central Electricity Authority).

The draft proposes a significantly revamped regime for the electricity sector. Among its key features are tariffs indexed to inflation (and, therefore, automatically revised), recovery of full costs without deferring them as “regulatory assets”, abolition of cross-subsidy surcharges (which effectively make industry pay for subsidised power to poorer consumers), and complete solarisation of agriculture by 2030 to shift farm demand to daytime solar hours and ease sharp evening peaks.

At its core lies an anticipated rise in per capita electricity consumption, which is currently about 1,460 kWh. Economic growth tends to drive electricity demand faster than population growth, and there is a clear policy push to shift energy use from fossil fuels to electricity, notably in mobility and cooking. The draft projects a rise in per capita consumption to 2,000 kWh by 2030 and double that by 2047. Crucially, this expansion in demand is expected to be green, and the policy is framed accordingly.

The draft reflects deeper shifts in thinking. The emphasis is no longer on headline capacity addition, which dominated the 2005 policy, but on structured resource adequacy planning and stronger demand forecasting. Financial discipline is another central theme, particularly the insistence on timely recovery of costs.

There is also a recognition of the expanding role of energy markets. As the India energy stack — often described as a UPI-like architecture for the power sector — gathers momentum, market mechanisms are expected to play a larger role.

Greening the grid finds explicit mention: solarisation of agriculture feeders, discouragement of net metering in favour of gross metering frameworks, support for open access, development of capacity markets, and building flexible coal-based capacity to complement renewables.

Cybersecurity receives due emphasis. The Central Electricity Authority is tasked with formulating cybersecurity regulations, and the draft provides clarity on data localisation: all infrastructure and control systems that store or process power sector data, including battery management systems, must be located within India.

Analysts have broadly welcomed the draft. Prayas Energy Group, the Pune-based think tank, notes that it addresses evolving sectoral needs through provisions for storage, market development, thermal flexibility and feeder solarisation, while also clarifying norms for data sharing and cybersecurity.

Sensible, but tough

The draft is, in many ways, a compilation of sensible ideas. The challenge lies less in identifying what needs to be done and more in executing it. Much depends on the financial health of the sector’s weakest link: the State-owned distribution companies (discoms).

Despite schemes such as UDAY and the Revamped Distribution Sector Scheme (RDSS), their finances remain fragile. State-run discoms have accumulated losses of ₹6.77 lakh crore and owe ₹7.11 lakh crore to creditors; many continue to sell power below cost.

The draft policy seeks to impose discipline: automatic tariff adjustments, timely payment of subsidies by State governments, elimination of cross-subsidies that burden industry, and a halt to the accumulation of regulatory assets. The last aligns with an August 2025 Supreme Court directive requiring clearance of regulatory assets within four years.

These measures, however, are politically sensitive. Rationalising tariffs could mean reducing industrial tariffs while raising domestic ones — never an easy proposition.

Nikunj Bhatnagar and Devishi Gupta of SKV Law Offices point out that, beyond political resistance, institutional constraints persist. They cite “procedural obstacles such as inadequate data, protracted hearings, litigation-induced stays, delayed ARR submissions and regulatory capacity constraints” as frequent causes of tariff delays.

The ministry informed the Lok Sabha on February 12 that the draft policy “does not contain any provision which would adversely affect poor consumers”, adding that low-income households would be protected through “appropriate regulatory frameworks”. The implicit approach appears to be direct benefit transfers: tariffs may rise, but governments could compensate vulnerable consumers directly.

Agri solarisation

Setting aside the formidable question of financial discipline, the draft contains several directionally positive elements. Perhaps the most significant of these is the push to solarise agricultural feeders. It mandates that, by 2030, states “shall complete solarisation of all agriculture feeders, suitably backed by storage”.

Under the Deen Dayal Upadhyaya Gram Jyoti Yojana, which concluded in March 2022, 7,833 feeders were separated — meaning that dedicated lines were created to supply farms and households independently from substations. The effort continued under the RDSS, launched in 2021. Of the 31,119 feeders sanctioned under RDSS, 7,846 have been separated.

The draft seeks to accelerate this process. Once agricultural load is segregated onto dedicated feeders, solar power can be supplied to them more effectively — aligning farm consumption with daytime generation and reducing subsidy burdens.

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Published on March 2, 2026