India’s States Turn Back To Coal Amid Rising Power Demand
POWER & RENEWABLE ENERGY

India’s States Turn Back To Coal Amid Rising Power Demand

Indian state electricity distributors are turning to long-term contracts with coal-fired power producers to meet surging evening demand, even as the country works to expand clean energy capacity.
Uttar Pradesh, India’s most populous state, and Assam in the east, which recently withdrew incentives for renewable projects, are planning to sign purchase agreements within two months for at least 7 gigawatts (GW) of coal-fired power to be supplied by 2030, according to bid documents reviewed by Reuters.
These agreements follow contracts for more than 17 GW of coal-based capacity signed in the 16 months to July, the largest such pipeline since the Covid-19 pandemic, India Ratings & Research said. The rush stems from an expected jump in air-conditioning demand during non-solar hours and slow progress in battery storage deployment. Analysts warn that this renewed reliance on coal could slow India’s decarbonisation goals, even as it remains the world’s third-largest emitter of greenhouse gases.
Ashis Kumar Pradhan, senior analyst at consultancy Wood Mackenzie, said the shift would likely keep India dependent on coal longer than expected. India aims to raise its coal-fired capacity by 46 per cent—from 210 GW now to 307 GW by 2035—while targeting 500 GW of non-fossil fuel capacity by 2030, nearly double the current 251.4 GW.
“We have revised our projection for coal-fired power generation in India, with the expected peak now occurring in the early 2040s, compared to the late 2030s in our previous outlook,” Pradhan noted.
In August, Adani Power announced investments of roughly Rs 417 billion (about $5 billion) in two new coal-fired plants, while Torrent Power unveiled a Rs 208 billion ($2.5 billion) project earlier this year. Torrent’s whole-time director, Jigish Mehta, said the company is also evaluating plans to add 5–7 GW of coal-based capacity over the next decade.
Although this expansion could temporarily raise coal’s share in India’s energy mix, solar power remains more cost-effective during daylight hours. “State distribution companies are struggling with grid instability due to renewable variability and insufficient scalable storage,” Mehta said.
However, experts argue that renewable projects paired with storage are now cheaper than new coal plants. “New coal power is getting more expensive, and the gap will only widen as battery systems scale up,” said Alexander Hogveen Rutter, an India-based independent energy expert.
India has auctioned around 12.8 gigawatt-hours (GWh) of battery storage capacity, but only 219 megawatt-hours (MWh) are currently operational, according to an August report by the Institute for Energy Economics and Financial Analysis (IEEFA).
States such as Madhya Pradesh, Tamil Nadu, and Bihar have cited delays in renewable project execution while opting for new coal-based plants this year. “Renewables alone cannot fill the base load gap,” said Narendra Bhooshan, a senior official at the Uttar Pradesh Energy Department. 

Indian state electricity distributors are turning to long-term contracts with coal-fired power producers to meet surging evening demand, even as the country works to expand clean energy capacity.Uttar Pradesh, India’s most populous state, and Assam in the east, which recently withdrew incentives for renewable projects, are planning to sign purchase agreements within two months for at least 7 gigawatts (GW) of coal-fired power to be supplied by 2030, according to bid documents reviewed by Reuters.These agreements follow contracts for more than 17 GW of coal-based capacity signed in the 16 months to July, the largest such pipeline since the Covid-19 pandemic, India Ratings & Research said. The rush stems from an expected jump in air-conditioning demand during non-solar hours and slow progress in battery storage deployment. Analysts warn that this renewed reliance on coal could slow India’s decarbonisation goals, even as it remains the world’s third-largest emitter of greenhouse gases.Ashis Kumar Pradhan, senior analyst at consultancy Wood Mackenzie, said the shift would likely keep India dependent on coal longer than expected. India aims to raise its coal-fired capacity by 46 per cent—from 210 GW now to 307 GW by 2035—while targeting 500 GW of non-fossil fuel capacity by 2030, nearly double the current 251.4 GW.“We have revised our projection for coal-fired power generation in India, with the expected peak now occurring in the early 2040s, compared to the late 2030s in our previous outlook,” Pradhan noted.In August, Adani Power announced investments of roughly Rs 417 billion (about $5 billion) in two new coal-fired plants, while Torrent Power unveiled a Rs 208 billion ($2.5 billion) project earlier this year. Torrent’s whole-time director, Jigish Mehta, said the company is also evaluating plans to add 5–7 GW of coal-based capacity over the next decade.Although this expansion could temporarily raise coal’s share in India’s energy mix, solar power remains more cost-effective during daylight hours. “State distribution companies are struggling with grid instability due to renewable variability and insufficient scalable storage,” Mehta said.However, experts argue that renewable projects paired with storage are now cheaper than new coal plants. “New coal power is getting more expensive, and the gap will only widen as battery systems scale up,” said Alexander Hogveen Rutter, an India-based independent energy expert.India has auctioned around 12.8 gigawatt-hours (GWh) of battery storage capacity, but only 219 megawatt-hours (MWh) are currently operational, according to an August report by the Institute for Energy Economics and Financial Analysis (IEEFA).States such as Madhya Pradesh, Tamil Nadu, and Bihar have cited delays in renewable project execution while opting for new coal-based plants this year. “Renewables alone cannot fill the base load gap,” said Narendra Bhooshan, a senior official at the Uttar Pradesh Energy Department. 

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