The government should consider designing a one-time debt takeover and restructuring scheme for distribution companies (discoms), with conditional support linked to performance, along with introducing green bonds for nuclear power projects, NITI Aayog said in a report released on Tuesday. The measures should include clearly defined, time-bound milestones for efficiency gains and improved governance, the report added.
Emphasising the importance of financially viable discoms for sustained investment in grid modernisation, the report on Viksit Bharat and Net Zero for the power sector said utilities could explore additional revenue streams by monetising non-core assets, such as leasing unused land, and by increasing participation in non-power purchase agreement (non-PPA) power markets.
Speaking at the launch of the report, Power Secretary Pankaj Agarwal highlighted the issue of long-term power purchase agreements (PPAs) with durations of up to 25 years that lead to demand risk for discoms.
“This is surely an area of concern. We aspire to introduce intermediary contracts and open up the sector for the commercial and industrial (C&I) segment, enabling them to directly engage in power procurement without incurring high surcharge costs,” he said.
The report also called for the gradual rationalisation of power tariffs to better reflect the cost of supply, while continuing to protect low-income households through targeted subsidies.
It also suggested the introduction of alternative franchise models for power distribution and the rollout of feeder segregation to ensure reliable and quality power supply. Segregation of agricultural and non-agricultural rural feeders has already helped several states improve load management and enhance electricity supply to rural households.
The NITI Aayog report stressed the need to implement the SHANTI Act to enable the rapid scale-up of nuclear power capacity, targeting 200-300 gigawatts by 2070. It suggested adopting public-private partnership (PPP) models to attract private investment into nuclear generation. To mobilise global climate finance and fund new projects, nuclear energy should be made eligible for green bond financing, given its low-carbon credentials, the report said.
The Aayog also proposed developing a viability gap funding (VGF) scheme for clean energy technologies, including concentrated solar power (CSP) and long-duration energy storage solutions such as pumped storage projects.
The report also called for large-scale deployment of carbon capture, utilisation, and storage (CCUS) technologies at coal-based power plants. While the Union Budget announced a ₹20,000 crore scheme for CCUS, the technology remains at a pilot stage. Agarwal said the government would work out the implementation framework for the scheme at a meeting later this week.
The NITI Aayog also released a net-zero pathway report for the transport sector, highlighting a huge investment gap under current trajectories.
“Implementing the net-zero pathway will require $4.3 trillion in cumulative investment by 2070, around 25 per cent higher than the $3.44 trillion projected under the current policy pathway. This additional investment, however, is a strategic opportunity rather than a cost burden,” the report said.
It added that early investments in electrification, biofuels, and hydrogen would insulate India from global fuel price volatility and position the country as a global leader in clean transport technologies.
Under its scenario modelling, energy demand from the transport sector is projected to fall to 200 million tonnes of oil equivalent (Mtoe) by 2070 under the Net Zero Scenario, about 40 per cent lower than the 336 Mtoe projected under the Current Policy Scenario.
To accelerate the transition to zero-emission vehicles, the think tank recommended prioritising high-utilisation fleets such as buses, taxis, and logistics vehicles through aggregated procurement, Renewable Energy Services Company models, and corridor electrification.
It also called for strengthening domestic manufacturing of batteries, cells, and power electronics through Production Linked Incentive-backed supply chains to ensure competitiveness and local value creation.
Echoing observations from the Economic Survey released in January, the report suggested using congestion and parking pricing, along with safe walking and cycling infrastructure, to reduce dependence on private vehicles and road freight. It further recommended leveraging the India Carbon Market to finance low-carbon mobility solutions.
 "NITI calls for one-time discom debt takeover, green bonds for N-power")
