The National Electricity Plan Framework For A Sustainable, Renewable And Reliable Source Of Energy

Policy Update
Paridhi Jain

Background

The National Electricity Plan (NEP) is a statutory document prepared by India’s Central Electricity Authority (CEA) under The Ministry of Power and it operates under Section 3(4) of the Electricity Act, 2003. NEP is a quantified projection (such as capacity addition requirements, demand projections, and infrastructure needs) of the National Electricity Policy which is periodically reviewed and revised to reflect changes in demand, technology, policy priorities, and economic conditions.

It was needed to address the challenge of balancing rising electricity demand with adequate and reliable supply to ensure planning of generation and transmission infrastructure in coordination, in order to meet future requirements sustainably and efficiently. The general objectives of the NEP include meeting growing electricity demand, increasing non-fossil fuel capacity, improving grid infrastructure, enhancing energy efficiency, ensuring power supply reliability and financial viability of the power sector.

Chronologically, the first NEP was notified in 2007 covering 2007-12, the Second Plan in December 2013 covering 2012-17, and the third plan which covers the detailed Plan for 2017-22 and the prospective Plan for 2022-27 was notified in 2018. Recent NEP provides a review of the last five years (2022-27) and projections for the period 2027-2032. Herein, the Beneficiaries include “electricity generators, transmission and distribution utilities, regulators, and end consumers who gain from systematic planning of power supply and infrastructure expansion.”

Functioning

It operationalises the National Electricity Policy by translating its objectives into implementable short term (5 years) and perspective plans (15 years) for distribution, generation, and transmission. The plan outlines short- and long-term regional demand forecasts. It also identifies cost-efficient locations for generation and transmission, taking into account system losses, load centres, grid stability, power quality, and environmental safeguards. It links these sites to the national grid through suitable transmission technologies and required redundancies. It further assesses efficient generation, transmission and distribution technologies, with fuel choices guided by economic viability, energy security, and sustainability.

It lays down how much generation capacity is needed, of what type, and by when to meet India’s future electricity demand. This demand estimation is drawn from Electric Power Survey (EPS) projections which is integrated into NEP volumes through forecasts of peak energy demand via GDP, sectoral Growth and capacity needs as estimated by electrification assumptions.

Each NEP is produced in two volumes: National Electricity Plan Volume I on Generation and National Electricity Plan Volume II on Transmission.

Volume I-Focuses on Generation. It plans on how electricity capacity India requires, of what type and by when does it need it. It’s key focuses include –

Demand Forecasting –- Central Electricity Authority projects electricity demand and requirements.
Assessment of Resources – In which assessment of availability of resources is done including non renewables (Coal and Natural Gas), renewables (solar, wind, hydro) and nuclear power where it focuses on import dependence and energy security
Capacity Planning – Determines optimal capacity mix to meet demand with reliability.
Environmental and energy constraints – Where it incorporates climate commitments and energy security

Volume II- Focuses on Transmission to make sure that the grid can evacuate, balance and reliably transmit the planned generation. Key focuses include –

Assessment of Transmission Requirement – It identifies the inter regional and intra regional power flows
Stability and Reliability of Grid – It addresses Inconsistency of renewables, Grid frequency control and its system security.
Network Planning – It plans on incorporating new substations, strengthening of existing grid, new transmission corridors while focusing on renewable rich regions.
Grid Integration – Which facilitates power sharing across regions, optimal and efficient use of surplus electricity and reduction in losses.

Performance

The first NEP (2005 to 2015) focused primarily on rapid addition of coal based capacity and basic transmission to rectify the chronic power shortages. The Plan (2012 to 2017) inter regional transmission network for enhanced National Grid Formation. It expands inter-regional capacity from 28 GW to 75 GW despite 20% execution delays of U. In the 2018 to 2022 plan, the focus was shifted to integration of large scale renewable energy where emphasis was given on solar and wind energy sources with limited new coal and pivoted to 175 GW RE targets (achieved 48%) with 115,000 ckt km transmission, exposing curtailment risks. .

The recent National Electricity Plan (2023 to 2032) is aimed at meeting a peak demand of 458 GW by 2032.. In the previous plan 2017-2022, around 73 GVA transformation capacity and 17,700 ckm lines were annually added. The new plan (2023 to 2023) aims to expand the transmission network to 6.48 lakh ckm in the country till 2032 with transformation capacity increasing to 2,342 GVA. From 2023 to 2024 around 14,203 ckm transmission lines were added and till now around 5 lakh ckm (circuit kilometers) lines have already been laid down in the country along with 1,407 GVA of transformation capacity.

Below is the total transmission system and transformation capacity that was strengthened annually in the country.

Nine HVDC (High Voltage Direct Current) lines of 33.25 GW capacity will be added in addition to 33.5 GW presently operating. There will be an increase in Inter-Regional transfer capacity from 119 GW to 168 GW (In which the plan is covering the network of 220 kv and above). Thus, Total projected HVDC capacity: 66.75 GW by 2032 (33.25 GW new + 33.5 GW existing)]

The total cost of plan 2023 to 2032 will be costing around ₹9.15 lakh crore according to the Ministry of Power which will help the country in meeting its growing electricity demand with integration of Renewable Energy, enhanced transformation capacity and expanded transmission lines.

Impact

CEA’s preparation of NEP documents reflects strengthened long-term visibility in India’s Power Sector through “Systematic demand forecasting and phased capacity addition” exemplified in the 5 year and 15 year plans. This reduces ad-hoc decision-making and aligns infrastructure development with projected requirements.

The Plan reduces the historical gap between power plants and evacuation infrastructure by integrating generation planning with transmission expansion. Inter-regional capacity scales from 119 GW (2022) to 143 GW (2025-26 achieved) and 168 GW (2032 target), countering Rajasthan’s 8 GW RE stranding in 2025—Press Information Bureau(PBI) confirms no national outages despite 38 GW RE adds.

“System-level Transformation” rather than mere “capacity addition” through transition to renewable energy by incorporating solar, wind, hybrid, and storage capacities into national planning. For reference, non-fossil capacity share was 25-30 % in the beginning of the plan, increasing up to 40-42% (2023) and is expected to account for 68-70% of total installed capacity by 2031-32 as per NEP Projections.

Increased federal coordination between State Electricity Plans and NEPs. This can be seen through the volume II of NEPs which assess Transmission by identifying the inter regional and intra regional power flows aligning State Plans- e.g., GEC(Green Energy Corridor) schemes commissioned 92% intra-state lines by 2025 but think tanks note persistent Centre-State frictions delaying DISCOM payments due to uneven resource distribution and development.

System reliability through energy storage, flexible power generation and ancillary services instead of relying on coal plans- leading to Grid Stability and tempering unchecked thermal expansion. Between 2019 and 2024, India’s non-fossil installed capacity rose from ~35% to over 43%, while the national grid frequency remained within the Indian Electricity Grid Code (49.9–50.05 Hz) for more than 99% of the time, with no national grid failure reported indicating improved grid stability despite higher renewable penetration. Furthermore, the Draft NEP 2026 signals progress by prioritising storage and grid flexibility in response to 2025 heatwave-induced demand peaks (~250 GW), with MoP reviews confirming ongoing adaptive revisions.

Economic Impact of NEP led to enhanced visibility that has catalysed significant investments, with renewable energy tenders worth ₹2.5 lakh crore issued by 2025; however, persistent DISCOM viability issues remain, as ACS–ARR gaps continue to generate losses of around ₹1 lakh crore, prompting policy briefs to underscore the need for tariff reforms to ensure effective execution.

Emerging Issues

Solar–Wind Curtailment (2.3 TWh lost, 2025): Inflexible coal plants force renewable power to be shut down during surplus periods, wasting 51% of non-fossil capacity gains. Proposed fixes include mandatory 10% BESS – Battery Energy Storage Systems co-location, pricing for grid support services, and more flexible RPO rules.
DISCOM Financial Stress (₹1 lakh cr losses): Tariffs do not reflect actual costs and cross-subsidies push industrial power prices 20–30% above global levels. Solutions focus on automatic tariff revision, demand-based charges, and revamped central funding support. According to CRISIL/PFC 2025, Operating losses are ~₹12-15k Cr whereas the Accumulated debt is ₹1 lakh Cr.
Transmission Delays: Right of way (RoW) such as Poor land access and coordination have left 8 GW of renewable power stranded in Rajasthan as confirmed in the Grid-India’s Operational Feedback report (April-June 2025), despite ambitious inter-regional targets. Stakeholders suggest faster HVDC (high Voltage Direct Current) lines, uniform RoW laws, and competitive private participation.
Demand Forecasting Gaps: EVs, data centres, and extreme heat shifted demand far beyond projections, with peaks hitting 250 GW in 2025. Annual forecast updates, AI-based models, and dynamic pricing are being explored.
Storage Deployment Lag: Only 48 GW of storage has been tendered against a need of 50 GW, as high costs slow adoption. Proposed measures include viability gap funding, local manufacturing, and faster approvals for pumped hydro.
Federal Execution Gaps: State-level plans often diverge from NEP goals, causing uneven implementation despite strong central progress. Linking funds to NEP targets and setting binding milestones are seen as key fixes.

Way Forward

The National Electricity Plan (NEP) has delivered against core objectives of achieving 51% non-fossil capacity share, five years ahead of 2030 targets while scaling inter-regional transfer from 28 GW (2012) to 143 GW (2025), analytically transforming chronic shortages into 250 GW peak supply resilience. In the immediate phase (2025-27), NEP prioritizes ancillary services markets and grid flexibility to manage variability; the medium phase (2027-30) targets 100 GW RE+storage tenders alongside hydro and battery expansions.

This positions India as a renewable energy superpower, aligning the 500 GW RE target with net-zero by 2070 and a projected $1 trillion green economy. However, 2.3 TWh solar curtailments and persistent DISCOM losses (₹1 lakh cr) expose execution gaps between planning excellence and federal coordination. It still requires ancillary markets, 50 GW BESS deployment, and tariff reforms to convert capacity into utilization (currently 25% RE generation share)

Critical Next Steps

Unified RE+storage tenders (100 GW by 2028)
Real-time DISCOM viability metrics in revisions
HVDC corridors for 300 GW RE zones

Delivering these bridges the 100 GW commissioning shortfall, cementing NEP as New India’s grid backbone.

References

Central Electricity Authority (CEA). (2023). National Electricity Plan (Generation), Volume I 2023-32. Ministry of Power, Government of India. https://cea.nic.in/wp-content/uploads/psp/2023/05/National-Electricity-Plan-Generation-2023-32.pdf

Central Electricity Authority (CEA). (2023). National Electricity Plan (Transmission), Volume II 2023-32. Ministry of Power, Government of India. https://cea.nic.in/wp-content/uploads/psp/2023/06/National-Electricity-Plan-Transmission-2023-32.pdf

Central Electricity Authority (CEA). (2023). National Electricity Plan – Preamble and Statutory Framework. Ministry of Power, Government of India. https://cea.nic.in/national-electricity-plan/

Press Information Bureau (PIB). (2023). The government notified the National Electricity Plan for 2023-32. Ministry of Power, Government of India. https://pib.gov.in/PressReleasePage.aspx?PRID=1964751

Government of India. (2003). The Electricity Act, 2003. Ministry of Law and Justice. https://powermin.gov.in/sites/default/files/The_Electricity_Act_2003.pdf

Press Information Bureau (PIB). (2025). Year End Review 2025: Power Sector Achievements. Ministry of Power. https://pib.gov.in/PressReleasePage.aspx?PRID=2181433

Ember Climate. (2026). India lost 2.3 TWh solar generation due to grid curtailments. https://ember-climate.org/insights/research/india-solar-curtailment-2025/

Mercom India Research. (2025). Rajasthan stranded renewable capacity analysis. https://mercomindia.com/rajasthan-renewable-stranding-2025/

International Institute for Sustainable Development (IISD). (2025). Mapping India’s Energy Policy Implementation. https://www.iisd.org/publications/india-energy-policy-2025

Central Electricity Authority (CEA). (2023). 20th Electric Power Survey of India (EPS). Ministry of Power. https://cea.nic.in/electric-power-survey/

Ministry of Power. (2026). Draft National Electricity Policy, 2026. Government of India. https://powermin.gov.in/sites/default/files/Draft_NEP_2026.pdf

ABOUT THE CONTRIBUTOR

Paridhi Jain is a third-year student pursuing BA. (hons) Philosophy at Lady Shri Ram College for Women. She is passionate about public policy, research and academic writing.