The numbers tell a story that would have seemed fantastical just a decade ago: renewables now account for over 34% of global electricity generation whilst coal has slipped below 33% for the first time in modern history. In India, this transformation is unfolding at breakneck speed, fuelled by an extraordinary solar boom that added 25 GW in 2024 alone, followed by another 25 GW by October 2025. The latest Ember report reveals a power sector in the midst of fundamental upheaval, where the economics of energy generation have shifted so dramatically that coal plants—once the undisputed backbone of India’s grid—now face declining utilisation rates, mounting financial strain, and an uncertain future. What’s driving this seismic shift isn’t merely policy ambition or environmental targets; it’s the brutal arithmetic of competitive auctions, plummeting solar costs, and a renewable revolution that’s reshaping how India generates, distributes, and thinks about electricity itself.
Solar and Wind Surge: The New Capacity Kings
India’s renewable expansion represents one of the fastest energy transitions any major economy has undertaken. Developers have rushed to bring projects online, particularly to secure inter-state transmission system waivers before their expiration, creating an unprecedented capacity addition spree. Solar and wind have become the nation’s fastest-growing energy sources, now serving as the primary drivers of capacity expansion whilst systematically eroding coal’s once-dominant position in the electricity mix.
This surge transcends mere megawatt additions—it reflects a fundamental economic shift. Competitive auction mechanisms, robust project pipelines, and dramatically falling costs for solar panels and battery storage have made renewable energy not just environmentally preferable but financially compelling. The National Electricity Plan now projects a continued decline in coal’s grid importance, acknowledging that market forces rather than regulatory mandates are increasingly dictating energy choices. Clean power can now be delivered at scale with reliability that matches or exceeds conventional generation, fundamentally altering investment calculations across the sector.
Coal Plants Struggle with Declining Utilisation and Rising Costs
The renewable revolution has left India’s coal fleet grappling with an existential crisis. Average plant load factors currently hover around 66%, but Ember‘s modelling suggests a further decline towards 55% by 2032. Coal stations originally engineered for steady baseload operation now find themselves forced into flexible ramping—powering down during solar-heavy afternoons and scrambling to meet evening demand peaks. This operational whiplash creates mechanical stress, wastes installed capacity, and drives costs upward in ways that reverberate through the entire power supply chain.
The financial arithmetic is stark. Coal-based electricity costing ₹4.78 per kWh under normal operations could surge to approximately ₹6 per kWh as utilisation rates tumble. Fixed charges must be spread across diminishing output, part-load operations reduce efficiency, and costly upgrades to meet stricter pollution standards add further burden. Even new ultra-supercritical coal plants with advanced emission controls struggle to justify their economics, with developers front-loading expenses that ultimately burden distribution companies and consumers. The once-reliable cost advantage of coal power is evaporating precisely when renewables are becoming cheaper and more abundant.
State-Level Innovation: Pioneering Flexible Grid Solutions
Progressive states are charting pathways through this transition rather than resisting it. Gujarat has signed power purchase agreements for variable-speed pumped storage, whilst Rajasthan achieved record-low tariffs for standalone battery systems—both initiatives designed to smooth renewable intermittency. Madhya Pradesh has launched solar-plus-storage tenders guaranteeing 95% availability during peak hours, demonstrating how storage can transform intermittent generation into dispatchable power.
These experiments represent crucial steps towards grid modernisation, though significant gaps remain. India currently operates only about 1 GWh of battery storage—a fraction of what’s needed to fully replace coal’s flexibility. This mismatch forces continued reliance on fossil generation for peak demand management, complicating grid operations as renewable penetration deepens. However, the trajectory is clear: tariffs for renewable-plus-storage projects now range between ₹4.3–5.8 per unit, making them increasingly competitive with conventional power whilst offering superior environmental performance.
Navigating the Transition: Policy Challenges and Market Reforms
India stands at a critical juncture where technological progress has outpaced institutional frameworks. The Ember report highlights distribution companies facing financial stress from legacy coal contracts that lock them into paying for underutilised capacity—potentially creating stranded assets that drain resources without delivering proportional benefits. These decades-long commitments, signed when coal dominated energy planning, now appear increasingly misaligned with operational reality.
Dave Jones of Ember captures the opportunity ahead: “Batteries will work with solar to make 24/7/365 electricity. There’s no reason why India can’t copy its solar success to become self-sufficient in battery manufacturing, too.” The implications extend beyond generation mix—they touch manufacturing policy, grid architecture, market design, and investment flows. Achieving India’s target of approximately 63% installed renewable capacity by 2030 requires a $57 billion investment alongside fundamental regulatory reforms that accommodate renewables and storage as primary rather than supplementary power sources.
The direction of travel is unmistakable. Renewables are transitioning from ambitious policy goals to grid reality, powered by economics that favour clean generation over fossil alternatives. Coal’s role is shrinking from baseload workhorse to backup resource, a profound reversal with implications spanning employment, regional development, energy security, and climate commitments. How smoothly India navigates this transformation—managing stranded assets, reforming markets, expanding storage, and maintaining grid stability—will determine whether the renewable revolution delivers on its promise of clean, affordable, and reliable electricity for all.