The past year has been a pivotal one for India’s power sector, shaped by a series of regulatory, policy and institutional reforms. From implementing environmental norms to deepening market design, digitalising operations and mainstreaming storage, the sector is being steered towards a cleaner, more transparent and reliable growth. Together, these developments signal not just incremental improvements but also a significant reorientation of India’s power sector towards resilience and future readiness.
Indian Infrastructure presents a round-up of the policy and regulatory developments in the power sector over the past one year…
Update on environmental emission norms and nuclear push
In July 2025, the Ministry of Environment, Forest and Climate Change amended the flue gas desulphurisation norms for coal and lignite-based thermal plants. Units in and around the National Capital Region and large urban centres (Category A) must comply by December 2027, while those near critically polluted zones (Category B) have deadlines up to December 2028. Plants outside sensitive regions have been exempted, subject to stack height requirements by December 2029.
In the nuclear sector, the Union Budget 2025 launched the Nuclear Energy Mission, targeting 100 GW by 2047, anchored on private participation, small modular reactors (SMRs) and domestic manufacturing. In March 2025, Nuclear Power Corporation of India Limited connected Unit 7 (700 MW) of the Rajasthan Atomic Power Project (RAPP) to the Northern Grid, marking the third 700 MW pressurised heavy water reactor after the Kakrapar Atomic Power Station (KAPS)-3 and KAPS-4. The twin unit, RAPP-8, is expected in 2025-26.
In May 2025, the Cabinet Committee on Economic Affairs approved a revised policy regarding the Scheme for Harnessing and Allocating Koyala Transparently in India for allocating coal to thermal power plants.
Transmission expansion and right of way clarity
In October 2024, the Central Electricity Authority (CEA) prepared the National Electricity Plan for Transmission. As per the plan, the interregional transmission capacity is planned to increase to 143 GW by 2027 and further to 168 GW by 2032, from the present level of 119 GW.
The Ministry of Power (MoP), in March 2025, issued revised guidelines for compensating landowners affected by the right of way for transmission projects.
In June 2025, the MoP proposed amendments to the Electricity Rules, 2005, to clarify the legal treatment of storage assets and enable new commercial models such as leasing and shared infrastructure. Interstate transmission charge waivers were extended to pumped storage projects awarded before June 2028 and also to battery systems co-located with renewable projects commissioned by June 2028.
Financial and operational discipline in discoms
The distribution segment witnessed a series of measures to strengthen performance and transparency. In August 2025, the Supreme Court directed all states and union territories to liquidate regulatory assets deferred by state electricity regulatory commissions within a four-year period starting April 1, 2024.
In January 2025, Uttar Pradesh initiated the privatisation of two state discoms to improve efficiency and attract investment, though employee resistance and structural weaknesses remain challenges.
In October 2024, the MoP introduced uniform accounting and disclosure rules, requiring detailed financial reporting, provisioning for receivables, and granular subsidy and payable data, thereby enhancing transparency and enabling better regulatory oversight.
Digital public infrastructure for power
The digital transition in the power sector advanced with the April 2025 launch of the India Energy Stack, a digital infrastructure framework enabling unique IDs for consumers, assets and transactions, and open APIs for system integration. In the same month, the CEA developed STELLAR, an indigenous planning tool integrating generation, transmission, storage and demand response for long-term adequacy and cost optimisation.
In September 2024, the MoP inaugurated the Computer Security Incident Response Team-Power, a central facility for monitoring and coordinating cybersecurity responses in the sector.
Power market reforms
In July 2025, the Central Electricity Regulatory Commission (CERC) issued a suo motu order to roll out market coupling under its Power Market Regulations, 2021. The plan is to sync the day-ahead market across all power exchanges using a round-robin system by January 2026, while real-time market and term-ahead market coupling will be tested later via shadow pilots.
In the same month, the Securities and Exchange Board of India approved the launch of monthly base load electricity derivatives on the Multi Commodity Exchange and the National Stock Exchange.
In June 2025, the CERC released draft amendments to the Power Market Regulations, 2021. These recognise virtual power purchase agreements, expand over-the-counter markets to include battery storage and banking contracts, and enhance regulatory oversight.
Conclusion
The increase in the integration of renewables, introduction of electricity derivatives and launch of digital platforms is gradually aligning India’s power sector with global practices while addressing domestic challenges of reliability, efficiency and sustainability. Going forward, the pace of execution and coordination among central and state agencies will determine how effectively these reforms translate into resilient and future-ready power markets.