The year 2024 was a record year for renewables in India, with the total renewable energy capacity reaching over 205 GW (as of November 2024), of which solar accounted for over 94 GW and wind power for approximately 48 GW. Renewable capacity additions have surged and the aim is to achieve a non-fossil fuel capacity of 500 GW by 2030. In 2024-25 (till November 2024), a significant 14.9 GW was added in the first eight months. The country also successfully met a peak power demand of 250 GW in May this year. As per recent Ministry of Power (MoP) data, during 2024-25 (till October 2024), the maximum peak demand touched 250 GW during solar hours and 236 GW during non-solar hours.
Amidst these developments, coal-based power (including lignite) generation remained an indispensable part of total generation, representing a share of around 71 per cent in the overall generation. India’s power demand witnessed a 4.5 per cent year-on-year increase during the first eight months of FY2025 (till November 2024), while the plant load factor of coal-based power plants reached over 70.4 per cent during this period, compared to 69.1 per cent in the corresponding period in FY2024.
Energy demand growth is expected to be even more robust in the next five years, placing India on a tightrope as it balances its renewable ambitions with the pressing need to power its fast-growing economy. The government has projected that peak demand would grow annually by 18 GW till 2029-30 (during solar hours) and 16 GW (during non-solar hours). There may, therefore, be significant periods when supply falls short of demand as
per projections.
Corroborating this outlook, the International Energy Agency, in its World Energy Outlook 2024 report, released in October 2024, noted that coal will continue to dominate India’s energy mix with an expected net addition of 60 GW by 2030. Though solar capacity is set to double over the next decade, coal-generated power will still surpass solar PV by 30 per cent due to the latter’s lower capacity factor. Coal-based power will meet 50 per cent of the energy demand of India’s industrial sector by 2035, keeping the country’s economy on track, it added.
While more green energy projects are being built as India works towards the 500 GW of non-fossil fuel target by 2030, the government has renewed its mandate of thermal capacity expansions this year, announcing a thermal power project pipeline of 80 GW by 2031-32. To complement the MoP’s efforts, there have been announcements from the Ministry of Coal (MoC) to begin preparations for ramping up coal availability and preparing inventory for a likely higher demand by
April 2025.
Thermal project pipeline
Coal-based power (including lignite) currently constitutes 217.6 GW of installed capacity (out of the total installed base of 457 GW) or a share of nearly 48 per cent. During FY2024, around 5.19 GW of coal-based capacity was commissioned, primarily contributed by the central and state sectors. In the current fiscal (till November 2024), a coal-based capacity of 60 MW has been added (a 60 MW independent power plant
in Odisha).
After a long hiatus, the coal-based power generation sector is undergoing an asset cycle expansion. As per the MoP, there are currently 29.2 GW of coal-based projects under construction and another 10 projects of 12.2 GW under bidding (see table). During the first 100 days of the present government, contracts for the implementation of 6,400 MW of thermal capacity have been awarded, as recently stated by the power minister in a Lok
Sabha reply.
Among the power majors with plans to add more thermal capacities, NTPC Limited has the highest share. In a recent investor call, NTPC stated that it is actively considering awarding thermal capacity of around 13.6 GW by FY2026-27. This is in addition to the 11.16 GW of thermal capacity under construction. It has already given investment approvals for the Sipat Super Thermal Power Project (STPP), Stage III (1x 800 MW) and Darlipali STPP Stage II (1×800 MW). Engineering, procurement and construction contracts for both projects have
been placed.
Apart from NTPC, other central sector players that have significant capacity under construction include NLC India Limited (2,400 MW), SJVN Limited (1,320 MW) and THDC India Limited (1,320 MW). Among state power gencos, Telangana State Power Generation Corporation Limited will add a capacity of 4,000 MW, which is under construction; Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited will add 1,980 MW; Tamil Nadu Generation and Distribution Corporation Limited will add 3,440 MW; Maharashtra State Power Generation Company Limited will add 660 MW; Haryana Power Generation Corporation Limited will add 800 MW; and West Bengal Power Development Corporation Limited will add 660 MW.
In the private sector, Adani Power has an organic pipeline of 12.52 GW of thermal projects, which include 2.92 GW of ongoing projects and 9.6 GW of awarded projects. It recently announced a proposal to invest around Rs 200 billion for setting up an ultra-supercritical thermal power plant (TPP) in Bihar. It has awarded coal-based power generation projects over the past six months, including Phase II and Phase III expansions at the Kawai site in Rajasthan and Mahan Phase III in Madhya Pradesh. Meanwhile, in a significant development, it recently received a letter of intent from Maharashtra State Electricity Distribution Company Limited for a 25-year long-term procurement for 1,600 MW of thermal power (1,496 MW net thermal power from a new 1,600 MW ultra-supercritical capacity project).
In addition to these projects, some stressed coal-based assets (under construction) are being revived, which are expected to add to the upcoming project pipeline. These include Phase II of the upcoming 1,320 MW Pathadi TPP of Lanco Amarkantak Power, now acquired by Adani Power; the 1,320 MW Athena Chhattisgarh Power Limited acquired by Vedanta Limited; the 1,800 MW KSK Mahanadi Power Project acquired by Medha Servo Drives; the 700 MW Meenakshi Energy Plant acquired by Vedanta Limited; and the 1,050 MW Monnet Power Plant acquired by Jindal Steel and
Power Limited.
In terms of financing, capital flows to the coal-based power generation sector have remained strong. As per the Centre for Financial Accountability’s Coal vs Renewables Investment Report 2024, while renewable energy financing surged 63 per cent to Rs 302.55 billion, coal-linked companies separately received corporate financing for a sum of Rs 259.45 billion ($3,141 million). Despite the absence of direct project financing for coal power projects, coal-linked companies have maintained significant financial support through corporate financing. US-based financial institutions provided the majority of corporate financing for coal-linked companies, contributing 65 per cent of the total funds. Underwriting services accounted for 96 per cent of coal-linked company financing, with direct loans comprising just 4 per cent. Among commercial banks, State Bank of India was the largest corporate lender in 2023, allocating loans worth Rs 9.17 billion ($111 million) and Rs 10.74 billion ($130 million) in underwriting services. ICICI Bank was the second largest lender, with a loan of Rs 740 million.
Policy efforts
Significant efforts are being made to strengthen fuel supply and support thermal power expansion. In FY2024, coal production rose by 11.65 per cent to reach 997.26 million tonnes (mt), surpassing the previous year’s figure of 893.19 mt. The coal ministry has a target of 1.5 mt annual production by FY2030. From FY2020 to FY2024, India’s coal production increased at 8.07 per cent per year from 731 mt to 997 mt. Notably, imports for blending purposes by TPPs have also decreased substantially, by 19.5 per cent during the April-October 2024 period.
The MoC reportedly plans to stock up on coal, targeting an opening stock of about 50 mt at TPPs by April 2026. Stocks at TPPs stood at around 34.57 mt on April 1, 2023, 47.34 mt on April 1, 2024, and 36.8 mt on December 1, 2024.
To ensure the timely completion of ongoing thermal projects, the MoP has implemented a monitoring mechanism. The Thermal Project Monitoring Group has been set up by the MoP to conduct monthly project reviews for proactive governance. The Central Electricity Authority is monitoring the progress of under-construction projects through site visits and regular meetings with developers to resolve critical issues. For real-time monitoring, a new project management portal, PROMPT (Portal for Online Monitoring of Projects – Thermal) has also been developed.
Outlook
The energy transition in India is complex and multifaceted. In addition to coal, 2025 is expected to witness a greater focus on expanding baseload capacities, including nuclear power. As India joins the global race for small modular reactor technology, the prospects for small nuclear technology appear strong. To this end, substantial investments in renewable generation capacity should be complemented by storage and baseload capacities. Managing decarbonisation while ensuring a balanced power supply is essential to provide the certainty and stability needed for economic growth. w
Reya Ramdev
