India’s Renewable Push Could Render Coal Expansion Plans Uneconomical—Here’s Why

India does not need any new to add more coal capacity than existing National Electricity Plan (NEP) 2032 targets through solar, wind and energy storage targets already set under the National Electricity Plan (NEP) 2032, according to an Ember report published on October 29.

The finding is premised on the assumption that India meets its NEP 2032 capacity addition targets for solar, wind and storage.

The report published by global energy think tank, Ember further warned that adding more coal capacity would be uneconomical  as renewable energy and battery storage are getting cheaper and more reliable, instead, it would make electricity more expensive for both power distribution companies and consumers.

The report also indicated that if these renewable and storage targets are met without adding coal beyond the 35GW already under construction, about 10% of additional coal units will remain unutilised by 2031-32, while nearly a 25% of the fleet will be heavily underutilised.

In addition, the report stated that India's power system is entering a new phase of transition. With renewables gaining a bigger share of the country's generation mix and storage would become cheaper, diminishing the role of coal.

The report found that the average utilisation of India's coal plants, known as plant load factor (PLF), will fall to 55% in 2031-32 from 69% in 2024-25.

This reduction will be uneven, hitting higher-cost and less flexible coal plants the hardest, with some units facing near-complete idleness and significant financial implications due to fixed costs being spread over fewer operating hours.

Coal will have to shift from being the main source of electricity to a flexible backup that fills in when renewables are not generating power. The reduced usage will make coal power more expensive.

As the same fixed costs are spread over fewer operating hours, the effective tariff of coal-based electricity is expected to rise by about 25% by 2031-32, the study said.

Rising Stranded Coal Assets

According to ET, India’s efforts to phase out coal capacity and transition to renewables means current coal plants risk becoming stranded assets. India surpassed 220 GW of renewable energy (RE) capacity in March 2025.

At the same time, coal output crossed the milestone of 1bn tonnes of FY2024-25, with 88% usage by power sector. The Ministry of Power also announced in 2024 that the country would add almost 90 GW of new coal-fired capacity through 2032, increasing earlier target by more than 60%. This dual approach indicates a contradiction, as increasing coal capacity alongside growing renewables could complicate the pace and nature of coal phase-down, reported ET.

Coal still accounts for around 70% of India’s power generation even as the renewable energy fleet grows, raising concerns over the future economics of coal.