Coal’s Diminishing Role in India’s Electricity Transition

India does not need to add any more coal-based power capacity beyond what is already planned under the National Electricity Plan (NEP) 2032, neither for reliability nor for meeting peak demand, finds a new report titled “Coal’s Diminishing Role in India’s Electricity Transition” by energy think tank Ember.

The study assumes that India meets its NEP 2032 capacity addition targets for solar, wind, and energy storage. It assesses how progress toward these targets reshapes the role and cost competitiveness of coal in India’s future power mix.

Renewable Energy Surging Ahead

India is witnessing record renewable energy expansion, with solar leading at over 20 GW of annual additions. This makes the NEP 2032 target of 365 GW of renewables attainable despite potential bottlenecks in grid integration and financing.

According to Ember’s least-cost operations model, if India achieves its NEP targets for renewable and storage capacity, 10% of the coal capacity added between FY 2024–25 and FY 2031–32 will remain completely unutilised, while nearly 25% of the coal fleet will be significantly underused.

Rising Costs and Declining Utilisation

The report highlights that coal-based electricity will become 25% more expensive in FY 2031–32 compared to FY 2024–25. This is attributed to declining plant load factors (PLFs), rising fixed costs, higher auxiliary consumption, and retrofit expenses.

Coal PLFs are projected to fall from 69% in FY 2024–25 to 55% in FY 2031–32, as coal transitions from being a baseload provider to a flexible balancing resource supporting renewable generation. Coal plants will need to frequently ramp up and down by 70–80 GW daily to balance solar and wind fluctuations, operating close to their technical minimum levels.

“Coal Beyond the Current Pipeline Is Neither Necessary Nor Economical”

“India’s power system is entering a new phase of transition. As renewables gain a bigger share of the generation mix and storage becomes cheaper, coal’s role diminishes,” said Neshwin Rodrigues, Senior Energy Analyst – Asia at Ember.

“Already, India’s auctions are incorporating more hours of battery storage. Batteries will work with solar to deliver 24/7 electricity. There’s no reason India cannot replicate its success in solar manufacturing to become self-sufficient in battery manufacturing,” he added.

Expensive Coal Tariffs Threaten DISCOM Finances

Coal-based power has already become cost-prohibitive, with recent discovered tariffs exceeding ₹6 per kWh in Bihar and ₹5.85 per kWh in Madhya Pradesh, even in states close to coal mines.

Due to lower PLFs, these tariffs could effectively rise to ₹7.25 per kWh, according to Ember’s model, intensifying the financial strain on electricity distribution companies (DISCOMs). Such dynamics also risk creating stranded coal assets—plants that remain underutilised but continue to incur servicing obligations.

Recommendations

Ember’s report calls for:

• Accelerating energy storage deployment to ensure round-the-clock renewable power.

• Retrofitting select thermal plants for deeper operational flexibility.

• Strengthening dispatch and reserve frameworks to integrate renewables at the lowest system cost.

As India’s generation mix evolves, coal will shift from being the pillar of the power system to a supporting, flexible role, marking a turning point in the country’s clean energy transition.

The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy