India’s Green Transition Still Runs on Coal

UPSC Syllabus: Gs Paper 3- Infrastructure

Introduction

The recent rise in global energy prices due to tensions in West Asia has exposed India’s continued dependence on fossil fuels despite rapid renewable energy expansion. India has achieved major growth in solar and wind capacity and crossed important non-fossil milestones. However, coal still dominates actual electricity generation and remains essential for grid stability and rising power demand. This shows that India’s energy transition is progressing in installed capacity, but the electricity system still relies heavily on coal for reliable and continuous power supply.

India’s Renewable Energy Progress

1. Major Rise in Non-Fossil Energy Share:

• Renewable energy accounted for 42.4% of installed power capacity by March 2026, compared to only 0.72% in March 2005.
• During the same period, coal’s share in installed capacity declined from 58.7% to 42.2%.

2. Strong Capacity Expansion in Recent Years:

• India’s total installed power generation capacity reached 520.51 GW by January 2026.
• Non-fossil fuel capacity crossed the historic 50% mark in June 2025 and further increased to 52.3% or 271.97 GW by January 2026.

3. Solar, Wind and Hydro Expansion:

• Solar energy emerged as the largest contributor among renewables with 140.60 GW capacity, forming 27% of installed power capacity.
• Wind power stood at 54.65 GW, while hydro power contributed 51.16 GW.

4. India’s Global Renewable Position:

• India maintained its global standing as 3rd in solar capacity, 4th in wind capacity, and 4th in total renewable energy capacity.
• FY 2025-26 also witnessed the highest annual capacity addition, with 52,537 MW added by January 2026.

The Gap Between Installed Capacity and Actual Electricity Generation

1. Installed Capacity Does Not Reflect Actual Power Supply: Although renewables account for over two-fifths of installed capacity, they generated only 15.8% of electricity in April 2026. Coal still generated 71.8% of electricity, only slightly lower than 76.2% in March 2019.
2. Renewable Energy Added Alongside Coal: India has expanded renewable infrastructure, but coal has not been replaced in the electricity mix. Renewable energy is being added on top of coal instead of displacing it from the system.
3. Limited Decline in Fossil Fuel Dependence: India added almost no new fossil fuel capacity after 2018, but it also retired very few old coal plants. Gas-based power capacity also declined, making coal the main balancing and backup source in the grid.
4. Wrong Benchmark in Energy Transition Debate: The public discussion mainly focuses on installed renewable capacity because it shows visible progress. However, electricity systems depend more on actual generation and the ability to provide uninterrupted power supply.

Reasons Behind Continued Coal Dependence

1. Coal Provides Reliable Baseload Power: Solar and wind energy are intermittent and depend on weather and sunlight conditions. Coal provides stable 24-hour electricity supply needed for grid stability and heavy industries.
2. Lack of Storage and Grid Infrastructure: India still lacks large-scale battery storage, flexible grids, and balancing systems. Coal therefore continues to perform the stabilising role in the power system.
3. Abundance of Domestic Coal Reserves: India possesses some of the world’s largest coal reserves. Domestic coal improves energy security and reduces dependence on imported fuels.
4. Protection from Global Fuel Volatility: Using indigenous coal reduces exposure to international fuel price shocks and geopolitical disruptions affecting imported oil and gas supplies.
5. Coal Remains Economically Viable: Coal continues to be the cheapest option for large-scale electricity generation. Renewable energy also requires expensive storage systems and grid upgrades for reliable supply.
6. Limited Retirement of Coal Plants: India added almost no new fossil fuel capacity after 2018, but very few old coal plants were retired. This has kept coal central to electricity generation.
7. Massive Employment Dependence on Coal: The coal sector supports over 10 million people, including around 4 million direct jobs. Many communities in central and eastern India depend heavily on coal-based livelihoods.
8. Coal Generates Major Government Revenue: Coal provides large revenue through taxes, royalties, and dividends for both central and state governments. Indian Railways also depends heavily on coal freight revenue.
9. Rising Power Demand Sustains Coal Use: India’s electricity demand is expected to increase sharply because of urbanisation and industrial growth. Current renewable capacity alone cannot meet this rapidly rising demand.
10. Fossil Fuels Still Influence Electricity Prices: Indian electricity prices continue to move with global fossil fuel markets because fossil fuels still determine the marginal cost of power generation.

International Comparisons Highlight India’s Challenges:

1. China Has Lower Fossil Fuel Dependence in Power Mix: Oil and gas account for only 4% of China’s power mix. This reduces China’s exposure to global fossil fuel price shocks.
2. Electric Vehicles Have Reduced China’s Oil Demand: Electric vehicles and hybrid vehicles now form more than half of new car sales in China. This has reduced oil demand by over one million barrels per day.
3. Spain Reduced the Gas-Electricity Link: Spain has weakened the direct connection between gas prices and electricity prices through stronger renewable integration. This has reduced vulnerability to global fuel market volatility.
4. India Remains More Exposed to Global Energy Shocks: India’s electricity prices still move closely with global fossil fuel markets because coal and imported fuels continue to dominate actual electricity generation.
5. India’s Transition Is Progressing but Still Incomplete: India has achieved major renewable capacity expansion, but coal continues to remain the backbone of actual electricity generation and grid stability.

Way Forward

1. Shift from Capacity Addition to System Transformation: India’s energy transition must move beyond headline renewable capacity growth. The focus should now be on creating a power system where renewables can reliably replace fossil fuels in actual electricity generation.
2. Expand Battery Storage Infrastructure: Large-scale battery storage systems are necessary to manage the intermittent nature of solar and wind power. Storage can help provide electricity even when renewable generation falls.
3. Modernise and Strengthen Electricity Grids: India needs flexible grids, better balancing systems, and modern transmission networks. These reforms are essential for integrating renewable energy at a larger scale.
4. Improve Transmission Connectivity: Stronger transmission infrastructure can connect renewable-rich regions with high-demand areas. This will improve power distribution and reduce dependence on coal-based balancing.
5. Promote Round-The-Clock Renewable Energy: Round-The-Clock renewable contracts combining solar, wind, and battery storage can provide stable electricity supply similar to coal-based power generation.
6. Develop Better Renewable Integration Mechanisms: Electricity markets and grid management systems must be redesigned to handle fluctuating renewable energy generation more efficiently.
7. Expand Coal Gasification Projects: India launched a ₹37,500 crore coal gasification initiative to convert 100 million tonnes of coal into synthetic gas by 2030. This can reduce dependence on conventional coal burning.
8. Encourage Carbon Capture and Biomass Co-firing: Carbon Capture and Storage technologies and biomass co-firing of up to 20% can reduce emissions from existing thermal power plants.
9. Improve Efficiency of Existing Coal Plants: Modernising older thermal plants and improving coal transport logistics through initiatives like Gati Shakti can lower economic and environmental costs.
10. Ensure Just Transition for Coal-Dependent Regions: Millions of people depend on coal mining and related industries for employment. Just Transition policies are necessary to protect livelihoods in coal-dependent regions like Jharkhand and Odisha.

Conclusion

India’s renewable energy transition has achieved significant progress in capacity expansion and non-fossil growth. However, coal still remains central to actual electricity generation, grid stability, employment, and energy security. India’s key challenge is to build a power system where renewables can reliably replace fossil fuels. Until then, global energy shocks will continue to expose India’s continued dependence on coal.

Question for practice:

Examine why India’s renewable energy transition still remains dependent on coal despite rapid growth in non-fossil energy capacity.

Source: The Hindu