New Delhi, May 23, 2025: India’s power sector is on the brink of a major transition, with a new study by the Centre for Research on Energy and Clean Air (CREA) warning that the country may be heading towards coal overcapacity, even as renewable energy increasingly meets peak electricity demands.

According to CREA’s analysis, India achieved a record electricity demand of 250 GW on May 30, 2024, largely met during solar hours without utilizing its full thermal fleet. Only 188.24 GW of thermal capacity was online at the time, with the remaining offline due to maintenance or forced outages. Yet, peak demand was successfully managed due to strong solar generation, which alone can contribute over 60 GW during daylight.

The study emphasizes that India has 32.3 GW of thermal capacity under construction and 23.55 GW of stressed capacity, which, if commissioned, will push total coal capacity from 215 GW to 271 GW. This figure exceeds the projected capacity needs—251 GW as per the Central Electricity Authority (CEA) and 262 GW by the National Electricity Plan (NEP)—suggesting that India’s existing and upcoming capacity is already sufficient.

Despite this, 22.6 GW of new coal capacity was awarded in FY 2024-25, with 5.6 GW already under construction. The study raises concerns that this expansion could lead to unnecessary investment, especially as renewables continue to reduce the strain on thermal resources.

CREA’s data shows a steady decline in coal and lignite’s share in gross power generation—from 71% in FY 2023-24 to 70% in FY 2024-25—while renewable energy (solar, wind, biomass) grew from 9% to 15% in the same period. Notably, in FY 2023-24, 305 out of 366 days recorded peak demand during solar hours, and in FY 2024-25, it was 256 out of 365 days.

Furthermore, the report found that during FY 2024-25:

• Daily power demand surpassed 250 GW on only one day.
• Demand remained under 220 GW for 232 days, well within the capacity of existing and under-construction resources.
• India has 234 GW of renewable energy in the pipeline, expected to further ease pressure on coal-based generation.

Speaking on the findings, Manoj Kumar, Analyst at CREA, stated, “India is undergoing a structural energy transformation. Rather than expanding coal capacity, the country should accelerate renewable energy development, modernize the grid, invest in energy storage, and enhance the flexibility of existing thermal plants to secure its energy future.”

CREA Recommendations:

• Reconsider new coal investments: India can meet its 2030 electricity demand without additional coal if it reaches a 600 GW non-fossil target (including 377 GW solar, 148 GW wind, 62 GW hydro, and 20 GW nuclear).
• Focus on energy storage and grid upgrades: With a 15% annual drop in battery costs, India can cap coal capacity at 260 GW by 2030, as envisioned in the NEP. Even with slower declines, coal demand would plateau.

The CREA report highlights that renewables have already become cheaper than coal—even after accounting for integration and balancing costs—suggesting that coal expansion may not only be environmentally unsound, but also economically inefficient.