New Delhi: Power Secretary Pankaj Agarwal said on Thursday that the Ministry of Power has moved the Cabinet on the draft National Electricity Policy (NEP) 2026 for inter-ministerial consultation. He expects the process to be brief. "We have already moved the Cabinet for the inter-ministerial consultation. I think it won't be taking very long," Agarwal told reporters on the sidelines of the 2nd Indian Power Sector Conference, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).
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The draft was circulated in January. Agarwal said the ministry has since incorporated the comments and observations it received from stakeholders. Once the inter-ministerial consultation is complete, the government will come out with the final policy.
The policy it replaces dates back two decades. "The new National Electricity Policy is being designed keeping in view the demands of Viksit Bharat 2047. The last policy was issued in 2005, and at that time we were facing a very different set of challenges," Agarwal said in his inaugural address. "Today, grid management, adequate transmission systems and financially sustainable, agile and technology-savvy distribution companies are among the key challenges."
He told reporters that shortages were among the concerns in 2005, when renewable energy was only beginning to be considered. "Today, we are at a very different level. This morning, you must have heard in the conference that we are already at 300 gigawatts of non-fossil energy," he said. "Going forward, the challenges are entirely different. Grid management itself is a challenge, and building transmission systems is a challenge."
Distribution companies (DISCOMs) are central to that shift. "If the contracts have to be bankable, I think the DISCOMs need to be in the best of health," Agarwal said. He also backed wider open access for industry. "If we really want our industry to be competitive, we need to promote open access in a big way. More and more industry may like to go green, and we need to provide them the enabling requirements and enabling regulation to help them achieve their goals."
Agarwal framed the policy around energy security. "For us in India, we have to accept that we need to move away from oil and gas. And what resources do we have? Sun, wind, biomass, nuclear and coal," he said in his inaugural address. "So, whether we like it or not, renewable energy is a reality and is key to our energy security."
That brings its own problem, he said. Variable renewable energy has to be integrated into the system, and its variability has to be addressed by building flexibility into the power system. Storage, he added, "should be provided (in the form of battery storage and Pumped Storage Projects (PSPs)." The NEP will therefore include flexibility measures along with market-based solutions, and he pointed to the green open access market as one such opportunity. "There is a lot of work to be done in this regard. I would say these challenges also present huge opportunities for investment," he said.
He also argued that the power sector should be planned as a whole rather than in pieces. Generation, transmission, storage and distribution must be planned together so that the system stays reliable and its infrastructure is used efficiently. "We need to move away from a fragmented approach and look at the power sector as a complete system. The question is not simply whether we have the resources; it is whether we have the right resources, technology and systems in place to meet the requirements of the future," he said.
Asked whether better use of the grid was a focus of the new policy, Agarwal said it was "not a focus but that is one of the dimensions of the grid stability." He explained why full utilisation is not realistic. "If the grid is utilised better, say 24x7, that is the best. But you can't expect the grid to be utilised 24x7 at a particular level. There will be fluctuations, but given those fluctuations, if we can really use 60 percent of the grid capacity, that is a very good system."
Agarwal urged the industry to use the current wave of investment to build domestic capability. "There is a huge opportunity to look at development in India, design in India and manufacturing in India," he said. "We always feel that we are lagging behind in power electronics. Let us take this opportunity because everybody is starting now."
He listed digitalisation, automation, advanced control systems, supervisory control and data acquisition (SCADA), electronics and sensors among the areas where that capability should be built. "We can learn from global experience and adopt proven technologies, but we must also use that experience to build our own capabilities," he said, according to FICCI.
Chips for smart meters are the nearest test. "Based on discussions with some of the manufacturers and chip developers, I'm quite hopeful that by mid-2028, we can expect and mandate 'design in India' chips in our systems, and maybe even 'make in India' chips," Agarwal said in his address.
He told reporters that the work is already under way. "Some of the chip developers and smart meter manufacturers are actively engaged. Some chips are already being designed," he said. "They need to test those chips, and as and when they are able to validate them, they will go for commercial production. So, it's not going to take very long." He added that he believed the ministry had already issued a Make in India requirement mandating India-designed chips in smart meters, with India-fabricated chips to follow later.
The government does not plan a separate incentive. "Our procurement will actually ensure that they have an assured market, and only chips designed in India will get marketed," he said.
On being asked about low coal stocks at several power plants, Agarwal said an unusual monsoon had squeezed supply and pushed up demand at once. "This year, the monsoon has been very peculiar. We had plentiful rainfall where we produce coal, and there has been a deficit of rainfall where we actually consume power. Large areas of southern India have seen such patterns," he said.
Heavy rain in the coal mining regions constrained supply and production. Meanwhile, weak rain in consuming regions pushed up power demand and, with it, coal burn. "Particularly in this month of September, the demand on coal-based electricity generation is elevated by 14 percent plus," Agarwal said. He said Coal India Limited (CIL) and captive and commercial miners were "trying very hard."
Moving coal is no longer a problem, he said. "The logistics challenges have been fully addressed. There is no logistics constraint today. Right now, we are getting more than 440 rakes on a daily basis, and we are very confident we will be able to negotiate it," he said. "Domestic supply is actually very good. It has picked up now, and with the rainfall receding, production will only go up."
On transmission, Agarwal called for corridors to be built as multi-circuit lines from day one. Today, double-circuit lines are often built and then built again along the same route. Each repeat needs fresh Right of Way (RoW), and he said it frustrates the farmers whose land the lines cross. "This will optimise RoW, reducing it almost by half," he said of the multi-circuit approach. He added that the Central Electricity Authority's (CEA) long-term transmission plan already shows what will be needed over the next five to 10 years, which is enough lead time to plan this way. "I urge CEA to seriously look into this as it is not only ROW efficient, it is also cost-efficient," said the top official.
CEA Chairperson Ghanshyam Prasad said the power system must advance the energy transition without losing reliability. "Earlier, generation and demand were relatively predictable. Today, we are experiencing greater variability in demand and greater uncertainty in generation," he said. "The numbers are important, but what is more important is how we transform the system and increase the share of clean energy in the overall energy mix."
Krishna Chandra Panigrahy, Director General of the Bureau of Energy Efficiency (BEE), made the case for demand-side management. Every unit saved through efficiency, he said, cuts the need for new generation, transmission and distribution infrastructure. He pointed to growing electrification of industry, buildings and transport, and to new power-hungry loads from data centres and artificial intelligence (AI). Demand response, efficient technologies and new ways of financing would be critical, he said, particularly for smaller enterprises.
Ashis Basu, Chair of the FICCI Power Committee and Executive Director of GMR Power & Urban Infra, said the growing share of variable, inverter-based renewable generation is changing how the grid operates. He called for advanced conductors, reconductoring and synchronous condensers to raise transmission capacity and stability. He said the sector should pursue "mandates and market mechanisms" together.
Vipul Tuli, Chair of the FICCI RE CEOs Committee and Chairman, South Asia and CEO, Hydrogen Business at Sembcorp Industries, said installed capacity will exceed 530 GW by the end of this fiscal year. "In future, we can see this demand increasing, but the nature of demand requires higher reliability along with sustainability," he said.
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Abhishek Ranjan, Chief Executive Officer (CEO) of BSES Rajdhani Power Ltd, flagged data centres as a new source of load. "We are anticipating that by data centres only, the demand will increase from 2.2 GW in 2025 to 12 GW by 2030, hence we are working on adequacy plans," he said.