India’s Coal Generation Drops 3% in 2025 as Renewables Cover Demand Peaks: CREA

India is currently witnessing a clean energy transition, with India’s coal-fired power generation falling by 3% in 2025—only the second decline in a full calendar year in at least half a century, the first being associated with the Covid-19 pandemic. This indicates a trend in which clean electricity sources are increasingly covering demand peaks, making additional coal power capacity increasingly redundant.

Highlighting this trend, a report by the Centre for Research on Energy and Clean Air (CREA) shows a decline in coal- and gas-fired power generation. This was driven by record growth in clean power generation. Clean energy growth contributed to 44% of the decline, while lower demand for air conditioning due to milder weather accounted for 36%, and a longer-term slowdown in power demand growth for other reasons contributed 20%, compared to the 2019–24 trend.

The report also noted that meeting India’s 500 GW non-fossil capacity target leaves no headroom for coal-based power generation to grow between now and 2030, even if power demand growth accelerates in the coming years.

36 GW of Under-Construction Coal Projects Could Drop Capacity Utilisation

Clean electricity sources are increasingly covering demand peaks, further reducing the need for new coal capacity. If under-construction coal power projects totalling 36 GW are completed, capacity utilisation could fall to unprecedented lows, leading to financial stress for generators and imposing excessive cost burdens on power consumers.

India’s power sector is undergoing rapid change as renewable energy deployment accelerates year after year. India added 41 GW of renewable energy capacity in the first eleven months of 2025, already setting a record for capacity additions in a full year and increasing the share of renewables to 40% of the country’s installed capacity.

In calendar year 2025, daily electricity demand shifted to higher bands, as the number of days with demand below 200 GW declined to 41 in CY 2025, from 145 days in CY 2023.

At the same time, days with demand in the 210–230 GW range rose sharply, reaching 219 days in CY 2025, compared with 72 days in CY 2023 and 188 days in CY 2024. Despite this shift, extreme demand peaks remained limited: electricity demand crossed 240 GW on only seven days, and there were no days above 250 GW.

Even with this shift, overall demand remains within the operational bandwidth of the current generation fleet. Furthermore, non-solar demand levels are well within the capacity that existing and under-construction thermal assets can manage, particularly when combined with hydro and other dispatchable sources. At the same time, rising electricity demand is increasingly being met by renewable generation, especially during daytime hours when solar power is available. This further facilitates the replacement of coal power with renewables.

The Challenge Is System Flexibility, Not Capacity Adequacy

India is now awakening to a new challenge, as most coal plants in India operate at minimum technical loads of around 55%. They are forced to continue running even during periods when low-cost renewable electricity is available. Long-term coal power purchase agreements also bind utilities to higher-cost thermal generation, even when cheaper renewable power is available.

This operational rigidity leads to avoidable curtailment of solar and wind generation. Therefore, the report recommends that enabling higher renewable penetration will require structural reforms to improve flexibility in the coal fleet, accelerate the deployment of battery energy storage systems, and strengthen grid infrastructure.

This annual power brief evaluates these evolving dynamics by reviewing India’s generation capacity, ongoing thermal capacity construction, electricity demand trends, source-wise generation patterns, and plant utilisation levels. It also examines the structural reforms required to effectively integrate high levels of renewable energy, including coal flexibilisation, storage expansion, and grid strengthening, while outlining the steps needed to prioritise renewable energy over new coal capacity additions.