Nuclear Power and Renewable Energy Under Draft National Electricity Policy 2026

A New Energy Mix: Clean, Reliable, Scalable

India's electricity sector is undergoing a fundamental transformation. The country has committed to achieving net-zero emissions by 2070, reducing emissions intensity by 45% below 2005 levels by 2030, and deploying 500 GW of non-fossil fuel capacity by 2030. Meeting these commitments while ensuring reliable, affordable electricity for a rapidly growing economy requires a carefully diversified clean energy portfolio.

The Draft National Electricity Policy (NEP) 2026, released on 20 January 2026, charts this portfolio with unusual clarity. It positions three clean energy pillars as the foundation of India's long-term electricity system: solar and wind energy (variable renewables), hydropower (flexible, storable clean energy), and nuclear energy (firm, baseload clean energy). Understanding the policy's approach to each — and how they interact — is essential to understanding the direction of India's electricity sector.

Part I — Nuclear Energy: From Niche to Mainstream

The Shift in Framing

NEP 2026 describes nuclear power as "a clean, reliable, and sustainable energy source with significant potential for India's long-term energy security." This characterisation is notable — it represents a clear departure from the more cautious framing of nuclear energy in earlier policy documents, which tended to acknowledge nuclear as a component of the energy mix without actively promoting it as a growth priority.

The shift is not accidental. It reflects two converging developments:

India's escalating climate commitments, which require large volumes of firm, zero-carbon electricity that variable renewables alone cannot provide
The enactment of the SHANTI Act, 2025, which enables private sector participation in nuclear power for the first time

The 100 GW Target

NEP 2026 sets a target of 100 GW of nuclear capacity by 2047, compared to approximately 8 GW currently. This requires an eleven-fold increase over 21 years — an average addition of approximately 4.4 GW per year, compared to less than 0.5 GW per year in recent history.

Achieving this target will require:

Simultaneous construction of multiple projects at different stages
Fleet-mode implementation to build domestic manufacturing supply chains for reactor components
Development of new reactor technologies suited to India's needs
Resolution of land acquisition and regulatory clearance bottlenecks

Small Modular Reactors and the Private Sector

The most significant enabling framework for nuclear expansion is the SHANTI Act, 2025 (Specific, Harnessable, Affordable, Nimble, Transformative and Improved Nuclear Technology Act). This legislation enables private sector participation in nuclear power — a fundamental change from the historical model where nuclear was exclusively a public sector domain.

NEP 2026 builds on this framework by proposing:

Development of Small Modular Reactors (SMRs) — advanced reactor designs with lower capital costs per unit, factory manufacturing, and modular deployment
Bharat Small Reactors — indigenously designed reactors intended to establish India's domestic nuclear technology capability
Collaboration between the Central Government and private sector for SMR development and deployment
Nuclear projects being eligible for Green Bond funding — recognising nuclear as a sustainable finance eligible activity

Industrial and Commercial Nuclear Power

An innovative proposal in NEP 2026 is encouraging large commercial and industrial (C&I) consumers to use nuclear-sourced power. This mirrors the approach taken with renewable energy — where C&I consumers have driven significant procurement through captive and open-access arrangements.

Nuclear power's characteristics — firm, 24×7 availability, no fuel price volatility, zero carbon — make it particularly attractive for energy-intensive industries that require reliable baseload power without the intermittency challenges of solar and wind.

Site Reuse

NEP 2026 proposes repurposing retired thermal plant sites for nuclear projects where feasible. This is a practical and pragmatic proposal: retired coal plant sites often have existing grid connections, cooling water infrastructure, and land that has already been cleared and appropriated, reducing the time and cost of new nuclear development.

Legal and Regulatory Implications

The nuclear expansion programme has significant legal dimensions:

The Atomic Energy Act, 1962 governs nuclear energy in India. The SHANTI Act, 2025 presumably amended or supplemented this to enable private sector participation. The regulatory framework for private nuclear operators — safety regulation, liability, waste management — will need to be developed
Nuclear liability under the Civil Liability for Nuclear Damage Act, 2010 (CLNDA) is a significant deterrent to private sector and foreign investment. CLNDA's provisions making suppliers liable for nuclear accidents created controversy and deterred foreign reactor vendors. The nuclear expansion programme will require clarity on how liability is managed for private nuclear operators
Green Bond eligibility for nuclear energy aligns with the EU taxonomy's inclusion of nuclear as a sustainable finance activity, potentially unlocking significant international capital

Part II — Renewable Energy: Integration and Market Deepening

From Promotion to Integration

NEP 2026 marks a shift in the renewable energy policy emphasis from promotion (adding capacity) to integration (ensuring that the capacity already added, and to be added, works efficiently with the rest of the grid). This reflects where India's renewable energy programme actually is — the promotion phase has been successful; the integration challenges are now the dominant issue.

Scheduling Parity by 2030

One of the most important renewable energy provisions is the target of scheduling and deviation settlement parity between renewable and conventional energy sources by 2030.

Currently, renewable energy enjoys certain exemptions in India's scheduling framework — generators can schedule based on forecasts and are subject to more lenient deviation settlement penalties. These exemptions were initially justified because renewable forecasting was unreliable and the volume of renewables was small. As renewables have grown to a substantial share of generation, these exemptions create distortions: renewable generators can deviate from their schedules without full financial consequences, pushing balancing costs onto other market participants and the grid.

Achieving scheduling parity will require:

Improved renewable energy forecasting technology — so that generators can schedule more accurately
Intra-day market mechanisms enabling generators to revise schedules as conditions change
Investment in weather prediction and grid management systems

Battery Energy Storage Systems and Pumped Storage

NEP 2026 emphasises deployment of Battery Energy Storage Systems (BESS) and Pumped Storage Projects (PSP) as the primary mechanisms for managing renewable energy variability.

BESS provides fast-response, flexible storage suitable for balancing intra-day variations in solar and wind generation. India's BESS market has been growing rapidly, supported by the Production-Linked Incentive scheme for advanced battery manufacturing.

PSP — pumped hydropower storage — is better suited for longer-duration storage, providing multi-hour to multi-day balancing capability. India has significant untapped PSP potential, and NEP 2026 proposes accelerating its development.

Peer-to-Peer Trading and the DSO

NEP 2026 envisions enabling peer-to-peer (P2P) trading of surplus distributed renewable energy — allowing solar prosumers to sell surplus power directly to other consumers (neighbours, businesses in the same industrial park) rather than only back to the DISCOM.

P2P trading requires a sophisticated Distribution System Operator (DSO) framework — a neutral entity that manages the distribution network and settles P2P transactions. Several countries (the Netherlands, Australia, parts of the US) have piloted P2P markets with promising results.

For India, P2P trading would represent a significant extension of electricity market liberalisation to the distribution level — a historically monopolised segment.

Domestic Battery Manufacturing

Recognising that dependence on imported batteries is a strategic vulnerability, NEP 2026 emphasises the development of domestic battery manufacturing capability. India's Production-Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) batteries is already pursuing this, and NEP 2026 reinforces it as a strategic priority.

The Complementarity of Nuclear and Renewables

A key insight in NEP 2026 is that nuclear and renewable energy are complementary rather than competing. Variable renewables — solar and wind — are excellent at providing zero-carbon energy when the sun shines and wind blows, but they create challenges of variability and intermittency. Nuclear power provides firm, 24×7 zero-carbon baseload that supports the grid during periods when renewables cannot generate.

The combination of large-scale solar and wind (for low-cost bulk energy) + pumped storage and BESS (for intra-day balancing) + nuclear (for seasonal and long-duration firm capacity) + hydropower (for flexible, storable clean energy) is increasingly recognised globally as the optimal architecture for a deep-decarbonisation electricity system.

NEP 2026 is the first Indian electricity policy document to articulate this portfolio vision clearly.

Conclusion

The nuclear and renewable energy provisions of NEP 2026 are ambitious and well-conceived. The nuclear expansion programme — if the SHANTI Act framework is effectively implemented — could provide India with a powerful clean energy option for the second half of the century. The renewable integration reforms — scheduling parity, storage deployment, P2P trading — address real market design challenges. The success of both will depend on the speed of regulatory implementation and the resolution of the structural issues (liability, land acquisition, DISCOM financial health) that have historically constrained the sector's growth.