India's Coal Pipeline May Create Overcapacity as Renewables Hit Record Levels: CREA

Study finds existing and under-construction thermal capacity sufficient to meet future demand projections.

Shruti ShiraguppiBy Shruti Shiraguppi calendar 26 May 2025 Views icon2484 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
India's Coal Pipeline May Create Overcapacity as Renewables Hit Record Levels: CREA

The Centre for Research on Energy and Clean Air released a study indicating that India's planned coal capacity expansion may result in overcapacity, as the country met its record electricity demand on May 30, 2024, without utilizing its full thermal capacity. The analysis was conducted by CREA, an independent research organization focused on energy and air pollution trends, and published from New Delhi.

India currently has 32.3 GW of thermal capacity under construction and 23.55 GW of stressed capacity. The completion of these projects would increase total coal capacity from 215 GW to 271 GW, exceeding projected requirements of 251 GW by the Central Electricity Authority and 262 GW by the National Electricity Plan.

On May 30, 2024, India recorded its highest electricity demand at 250 GW during solar hours with only 0.1 GW shortage. The country met this peak demand with 188.24 GW of thermal capacity online, while the remainder remained offline for maintenance or forced outages. Solar generation contributed over 60 GW during daylight hours, demonstrating the increasing role of renewable energy in meeting peak demand.

The renewable energy sector's contribution to total gross generation increased from nine percent in fiscal year 2023-24 to 15 percent in fiscal year 2024-25 on peak demand days. Coal and lignite's share declined marginally from 71 percent to 70 percent during the same period.

During fiscal year 2024-25, power demand exceeded 250 GW on only one day, with 232 days recording demand below 220 GW. Peak demand during non-solar hours increased from 210.64 GW to 224.18 GW between the two fiscal years. The analysis found that 305 out of 366 days in fiscal year 2023-24 experienced daily peaks during solar hours, compared to 256 out of 365 days in fiscal year 2024-25.

The government recently increased the coal-based power capacity target for the next seven years from 80 GW to 100 GW. However, 22.6 GW of new coal capacity was awarded during fiscal year 2024-25, with 5.6 GW already under construction.

"The government's plan to raise the coal-based power capacity target for the next seven years from 80 to 100 GW reflects an intent to meet India's growing electricity demand. However, the country is already undergoing a structural transformation in which existing capacity is sufficient to meet future power demands. Instead of expanding coal-based power generation, India has an opportunity to strengthen its energy future by focusing on accelerating renewable energy development, modernizing the grid, increasing storage capacity, and improving the flexibility of the existing thermal power plants," said Manoj Kumar, Analyst at CREA.

India maintains 234 GW of renewable energy capacity in the pipeline, which will further reduce pressure on thermal resources as solar continues to dominate during peak hours.

CREA's analysis suggests that India can meet projected electricity demand by 2030 without additional coal capacity if it achieves a 600 GW non-fossil target comprising 377 GW solar, 148 GW wind, 62 GW hydro, and 20 GW nuclear capacity. The organization's research indicates that battery storage cost declines of 15 percent annually would allow India to cap coal capacity at 260 GW by 2030, avoiding new coal development entirely.

The study recommends reconsidering new coal investments and increasing investment in energy storage, transmission, and grid technologies. CREA notes that renewables with integration and balancing costs have become cheaper than coal-based generation, reducing reliance on thermal plants.

The Centre for Research on Energy and Clean Air operates as an independent research organization focused on air pollution trends, causes, health impacts, and solutions, supporting governments, companies, and organizations in transitioning to clean energy.

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