The Ministry of Power (MoP) on August 10, 2026, issued Framework for Balancing Electricity Financial Sustainability and Affordability.
The Government of India has built a comprehensive regulatory framework under the Electricity Act, 2003, comprising the National Electricity Policy, Tariff Policy, and regulations from the Central Electricity Authority and Electricity Regulatory Commissions. Tariffs are determined by State Electricity Regulatory Commissions based on power procurement, transmission, and supply costs, with states empowered to subsidize consumers. The Draft National Electricity Policy, 2026 introduces key reforms including mandatory Resource Adequacy Plans for distribution licensees, progressive recovery of fixed costs through demand charges, automatic monthly Fuel and Power Purchase Cost Adjustment (FPPCA) mechanisms, a stabilization fund to cushion cost fluctuations, and measures to prevent regulatory assets while ensuring timely annual tariff revisions. Consumer protection is reinforced through the Electricity (Rights of Consumers) Rules, 2020 and proposed strengthening of grievance redressal via online tracking and virtual hearings.
To reduce electricity costs and support distribution licensees, the government has enabled competitive power procurement, allowed cheaper domestic coal usage, and launched the Revamped Distribution Sector Scheme (RDSS) (₹3,03,758 crore outlay) for loss-reduction infrastructure and smart metering—building on earlier schemes like DDUGJY, IPDS, and SAUBHAGYA. Additional support includes extra borrowing consent (0.5% of GSDP) tied to power sector reforms, prudential lending norms, and FPPCA/subsidy accounting rules. As a result, average supply hours have risen significantly (rural: 12.5 to 22.6 hours; urban: 22.1 to 23.4 hours, FY14–FY26).
On the generation and grid front, India's installed capacity is projected to reach 874 GW by 2031-32, guided by state-level Resource Adequacy Plans. Substantial capacity additions are underway across thermal (~47,545 MW under construction), hydro (~12,973 MW under construction), nuclear (8,000 MW under construction), and renewables (1,47,720 MW under construction, primarily solar and wind). Energy storage is being scaled up aggressively through Pumped Storage Projects and Battery Energy Storage Systems (BESS), supported by PLI schemes, Viability Gap Funding, ISTS charge waivers, and revised guidelines allowing consumer-owned storage systems.
Finally, renewable energy integration is being strengthened through RE Zones, Regional Energy Management Centers, the Green Energy Corridor scheme, GNA Regulations amendments for solar/non-solar connectivity, and grid-stabilization technologies (STATCOMs, SVCs). Transmission modernization—via FACTS, Dynamic Line Rating, and underground cabling—along with revised Right of Way compensation guidelines (linked to market rates) aims to address transmission challenges and support a resilient, storage-integrated grid for higher renewable penetration.
[Release ID: 2297228]
