Renewables gain ground 

November 18, 2025

India’s renewable energy sector is rapidly reshaping the country’s power landscape, putting coal power under growing economic pressure and reducing its contribution to the electricity mix, according to a new analysis by energy think tanks Ember and Climate Trends. The report highlights the implications of record-breaking solar installations on grid operations and financial sustainability.

Between 2024 and October 2025, India added 50 gigawatts (GW) of solar capacity, driven largely by developers seeking to benefit from an expiring inter-state transmission system (ISTS) waiver. Competitive auctions and a strong project pipeline have reinforced renewables as the fastest-growing segment of India’s power sector. However, this rapid expansion is altering how coal is used. The average plant load factor (PLF) for coal plants has fallen to around 66 percent and could decline to 55 percent by FY32 if the National Electricity Plan’s renewable and storage targets are met. Coal plants, historically designed for steady baseload generation, are now increasingly required to ramp up and down to meet solar-heavy daytime peaks and evening demand.

This operational shift has created challenges for grid management. India currently has less than 1 gigawatt-hour of battery storage, forcing states to rely on coal to meet peak requirements. The push-and-pull between coal and solar has complicated long-term planning, while financial pressures are mounting for distribution companies. Many remain tied to long-term coal power purchase agreements, incurring high fixed costs even as plants operate at lower utilization. Analysis shows that coal power costing Rs 4.78 per kilowatt-hour at normal output could rise to Rs 6 per kilowatt-hour when underuse is factored in.

New coal projects offer limited relief. Rising fixed costs, driven by advanced technologies, emission controls, and flexibility upgrades, are further straining utilities. Some developers front-load costs to remain competitive, potentially raising long-term prices for buyers.

States are experimenting with solutions. Gujarat, Rajasthan, and Madhya Pradesh are trialing flexible procurement models. Gujarat signed a PPA with THDC for variable-speed pumped storage, Rajasthan secured low-cost standalone battery systems, and Madhya Pradesh tendered a solar-plus-storage project ensuring 95 percent availability during daytime and peak hours. Shorter PPAs and three-part tariff structures are being tested to align incentives with a renewable-heavy grid.

The report concludes that India is entering a critical phase of its energy transition. While a low-cost, renewable-dominated system is achievable, it will require reforms in market design, procurement, and planning. The rapid growth of renewables is driven not by mandates but by cost competitiveness and deployment speed, signaling a fundamental transformation in India’s power sector.