Subscribe
Ember report says coal expansion beyond current pipeline would be uneconomical
New renewables and storage capacity expected to outperform coal on cost and reliability
Coal’s share to fall as plant load factors drop and operating costs rise by 2032
India’s coal-fired power expansion plans face a stark economic reality check. A new report by the global energy think tank Ember finds that any new coal capacity beyond what is already under construction and targeted in the National Electricity Plan (NEP) 2032 would be uneconomical, as renewables and battery storage increasingly outcompete thermal power on both cost and reliability.
The analysis, based on a least-cost operations model of the Indian power system, shows that if India achieves its NEP 2032 targets for solar, wind, and storage, coal’s share will decline sharply. Up to 10 per cent of additional coal units built after FY25 could become entirely unutilised, while another 25 per cent may be heavily underutilised by FY32.
“Building coal beyond the current pipeline is neither necessary nor economical for the country,” said Neshwin Rodrigues, senior energy analyst (Asia) at Ember and lead author of the report, in a statement. “As renewables gain a bigger share of India’s generation mix and storage becomes cheaper, coal’s role will shift from a baseload provider to a flexible balancing resource — and that will make coal-based electricity costlier.”
The report, titled The Role of Coal in India’s Transition, finds that coal generation costs are expected to rise by 25 per cent by FY32, driven by falling utilisation rates, rising operation and maintenance expenses, and part-load inefficiencies as coal plants ramp up and down to accommodate solar peaks.
India’s average plant load factor (PLF) for coal plants is projected to drop from 69 per cent in FY25 to 55 per cent by FY32. With solar capacity growing rapidly — more than 20 gigawatts (GW) of additions annually now becoming the norm — coal units will need to operate closer to their technical minimum limits during the day, often cycling by 70-80 GW between morning and mid-day.
That deeper cycling and lower utilisation will make coal power more expensive for distribution companies (DISCOMs), even without new capacity. Ember estimates that the effective tariff for coal-based electricity could rise from Rs 4.8 to Rs 6 per kilowatt-hour (kWh) by 2032, overtaking firm and dispatchable renewable energy (FDRE) options such as renewables coupled with battery storage, which are already available at Rs 4.3-Rs 5.8 per kWh.
“Renewables with storage now clearly stand out as the more prudent investment choice,” said Duttatreya Das, co-author and energy analyst (Asia) at Ember, in the statement. “Having learned from past coal overbuild, India must avoid repeating old mistakes amid a rapidly changing energy landscape.”
Ember’s chief analyst, Dave Jones, underscored the scale of transformation in the battery sector. “The grid batteries of today look nothing like those of even a year ago. Their lifetimes now run into decades, fire risk is almost eliminated, and the latest sodium-ion batteries use zero critical minerals,” he said in the statement. “There’s no reason India can’t replicate its solar manufacturing success in batteries and energise the nation with home-grown solar and storage.”
The report highlighted that India can meet its 2032 electricity needs with the 35 GW of coal capacity already under construction, provided renewable and storage targets are achieved. Any further coal buildout, Ember warns, would create stranded assets and saddle DISCOMs with higher fixed-cost obligations for underutilised plants.
To manage the transition, Ember recommends retrofitting select thermal units for greater flexibility, accelerating storage deployment, and reforming dispatch mechanisms — such as the Market-Based Economic Dispatch (MBED) framework — to improve system efficiency. It also calls for linking coal contracts to seasonal demand rather than fixed annual capacity charges, ensuring plants operate only when required.
“India’s power system is entering a new phase — one where reliability comes from flexibility, not from more fossil fuel,” said Rodrigues. “Investing in renewables and storage will not only align with India’s NEP goals but also secure a cleaner, cheaper, and more resilient power future.”