India does not need to build any new coal plants beyond those already under construction to meet its electricity demand through 2032, according to a report released Wednesday by climate think tank Ember.
The report finds that solar, wind, and battery storage can fill the gap as coal plants become more expensive and less efficient. Coal’s role in India’s power system is shrinking from a steady baseload provider to a backup resource that operates only when renewable energy cannot meet demand.
“The grid batteries of today look nothing like the grid batteries of even just 12 months ago,” said Dave Jones, Chief Analyst at Ember. “Their lifetime now runs into decades, they are mostly plug-and-play so can be installed quickly and easily, the fire risk is all-but eliminated, and the latest sodium ion batteries use zero critical minerals.”
The report was published on October 29, 2025, and authored by Neshwin Rodrigues, Duttatreya Das, and Matt Ewen.
Coal Plants Running Less, Costing More
Coal plant utilization rates are falling rapidly. The report projects that plant load factors will drop from 69 percent in fiscal year 2024-25 to around 55 percent by 2031-32. Plant load factor measures how much a power plant actually generates compared to its maximum capacity.
When coal plants run less often, their costs increase. Fixed expenses like debt payments, maintenance, and staff salaries must be spread across fewer units of electricity. The report estimates this will make coal power roughly 25 percent more expensive than current levels.
New coal plants in India now charge tariffs near six rupees per kilowatt-hour. In Bihar, recent coal tariffs have exceeded six rupees, while Madhya Pradesh coal projects are priced around 5.85 rupees per kilowatt-hour.
By contrast, renewable energy paired with battery storage costs between 4.3 and 5.8 rupees per kilowatt-hour. Solar-plus-storage projects are priced even lower, between 2.9 and 3.6 rupees per kilowatt-hour.
How Solar Changed Daily Grid Operations
Solar power has fundamentally changed how India’s electricity grid operates each day. During peak solar hours from 9 AM to 3 PM, coal plants must sharply reduce output to make room for solar generation.
On representative days in April 2025, coal generation fell from 165 gigawatts at 7 AM to just 113 gigawatts by 1 PM. This represents a 52 gigawatt reduction in six hours.
By 2031-32, the coal fleet will need to swing by 70 to 80 gigawatts between morning and midday, the report projects. Coal plants will operate with only about seven gigawatts of headroom above their technical minimum during solar peaks.
This means many coal plants will need to run at 40 percent capacity or lower during daytime hours, then rapidly increase output each evening as solar generation fades. Only a handful of centrally dispatched interstate plants currently handle this flexibility requirement, often operating near or below their technical limits.
Record Solar Growth Continues
India installed a record 23.8 gigawatts of new solar capacity in fiscal year 2024-25. Another 22 gigawatts were commissioned in just the first half of fiscal year 2025-26 through September 2025.
The country now has 116 gigawatts of solar installed and 86 gigawatts under construction. To reach the National Electricity Plan target of 365 gigawatts by 2032, India needs an additional 163 gigawatts, averaging 32.6 gigawatts annually through 2030.
Wind capacity additions need to accelerate from roughly 3.5 gigawatts added in 2024 to 8.8 gigawatts per year to meet the 2032 target of 124 gigawatts. India currently has 52 gigawatts of wind installed and 28 gigawatts under construction.
Battery storage is expanding rapidly from a small base. India has only 500 megawatt-hours operational as of August 2025, but about 68 gigawatt-hours are in various stages of development. The National Electricity Plan targets 236 gigawatt-hours by 2032.
Madhya Pradesh Faces Transition Challenge
Madhya Pradesh operates major coal plants at Singrauli, Satpura, Amarkantak, and Sasan. The state also hosts the 750 megawatt Rewa Solar Park and the developing Agar Solar Park.
Distribution companies in Madhya Pradesh and other states remain locked into long-term contracts with coal plants. These contracts require them to pay fixed charges regardless of whether the power is actually used.
The report finds that roughly 10 percent of additional coal units would be entirely unused by 2031-32, while another 25 percent of the fleet would be heavily underutilized. These stranded assets continue to incur costs that get passed to consumers through higher electricity tariffs.
The report states that about 35 gigawatts of coal capacity is already under construction across India. This pipeline includes supercritical and ultra-supercritical plants with staggered commissioning dates through 2030.
Policy Recommendations
The report recommends that India stop approving new coal plants beyond the 35 gigawatts already under construction. It suggests distribution companies avoid new 25-year power purchase agreements with coal plants.
Instead, the report recommends short or medium-term contracts of three to five years that can adjust to changing system needs. New capacity additions should focus on solar, wind, and battery storage.
The report also recommends that regulators identify which coal plants can operate at 40 percent of rated capacity, down from the current 55 percent minimum. This would allow more solar power to enter the grid during daytime hours.
State-level coal plants should be integrated into the central optimization system to allow more flexible dispatch alongside interstate plants, the report states. This would create a larger pool of thermal capacity available to balance solar output.
India is broadly on track to meet its 2032 generation mix targets for solar, coal, and hydro, according to the report. Nuclear capacity is likely to fall slightly short due to long construction times and limited near-term pipeline.Retry
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