India's Coal-Fired Electricity Generation Drops for First Time in 50 Years in 2025 Due to Record Renewable Growth

Why in News

A new study by the Centre for Research on Energy and Clean Air (CREA) revealed that India's coal-fired power generation fell by 3% in 2025 compared to 2024, marking the first year-on-year decline in half a century without pandemic influence. This shift highlights the rapid rise in clean energy sources like solar and wind, which outpaced overall power demand growth, signaling a potential peak in coal use and supporting India's climate goals.

Key Points

1. Coal-fired plants produced 1,283 billion units of electricity in 2025, down 3% from 1,322 billion units in 2024, while total power generation rose by about 1%.
2. Renewable energy generation grew by 22%, adding 49 TWh, and hydropower increased by 15%, contributing 23 TWh, together driving down coal output.
3. India added a record 41 GW of renewable capacity in the first 11 months of 2025, with 35 GW from solar, 6 GW from wind, and 3.5 GW from hydropower.
4. Non-fossil installed capacity reached 266.78 GW by year-end, a 22.6% increase from 217.62 GW in 2024.
5. The decline was due to 44% from clean energy growth, 36% from milder weather reducing air conditioning demand, and 20% from slower overall power demand growth.
6. This is only the second full-year drop in coal generation in 50 years, the first being in 2022 due to Covid-19 impacts.
7. India's power sector CO2 emissions also fell in the first half of 2025, the first such decline for any half-year period.
8. Similar trends occurred in China, with a 1.6% drop in coal generation, as both nations added massive clean energy capacity.
9. No new coal capacity is needed beyond current projects to meet 2030 demand, as existing and under-construction plants (36 GW) suffice.
10. Low coal plant utilization (potentially dropping further) could cause financial stress for generators and higher costs for consumers if more coal is built.

Explained

What is Coal-Fired Electricity Generation and Why Has It Been Dominant in India?

Coal-fired generation involves burning coal to produce steam that drives turbines for electricity: This method has been India's main power source due to abundant domestic coal reserves and low costs.

Historical reliance on coal: Since the 1970s, coal has powered industrial growth, meeting over 70% of electricity needs, but it contributes to high pollution and CO2 emissions.

India's coal reserves and production: The country has the world's fifth-largest coal reserves, producing about 900 million tonnes annually, mainly from states like Jharkhand and Odisha.

What Caused the Decline in Coal Generation in 2025?

Surge in renewable energy output: Clean sources like solar and wind grew rapidly, adding 41 GW capacity and producing 49 TWh more than in 2024, covering new demand.

Milder weather impacts: Reduced need for air conditioning lowered peak summer demand by 36% of the coal drop, as 2025 had cooler temperatures compared to previous years.

Slower demand growth: Overall electricity demand rose only 1%, below the 2019-2024 average of 5-6%, due to economic factors and energy efficiency improvements.

What is the Role of Renewable Energy in This Shift?

Rapid capacity additions: India installed 35 GW solar, 6 GW wind, and 3.5 GW hydro in 2025, pushing renewables to 40% of total installed capacity at 266.78 GW.

Growth in non-fossil generation: Non-fossil sources increased by 71 TWh, exceeding total demand rise of 21 TWh, forcing coal plants to run less.

Government targets and policies: Under the National Renewable Energy Program, India aims for 500 GW non-fossil capacity by 2030, supported by schemes like PM Surya Ghar for rooftop solar.

How Does This Compare to Global Trends, Especially China?

Simultaneous decline with China: China's coal generation fell 1.6% (58 TWh) in 2025, its first drop in 50 years, driven by 300 GW solar and 100 GW wind additions.

Global emission impact: India and China drove 93% of CO2 rise from 2015-2024; their 2025 declines could signal a global peak in emissions if trends continue.

Differences in drivers: China's drop occurred despite 5% demand growth, fully offset by clean energy, while India's was aided by slower demand.

What Are the Environmental and Health Implications of Reduced Coal Use?

Lower CO2 emissions: India's power sector, contributing 40% of national emissions, saw a first-half decline in 2025, aiding net-zero by 2070 goal.

Improved air quality: Coal plants cause pollution affecting health; reduced operation could cut diseases like respiratory issues in coal-heavy regions.

Biodiversity benefits: Less mining and transport reduce habitat loss in areas like Eastern Ghats, supporting India's Paris Agreement commitments.

What Challenges Remain in India's Power Sector?

Coal plant rigidity: Many operate at minimum 55% load, leading to renewable curtailment despite lower costs, due to long-term contracts.

Financial risks: Adding more coal (planned 100 GW by 2032) could drop utilization below 50%, causing losses for companies like NTPC.

Grid and storage needs: To integrate more renewables, India requires better grids and 50 GW battery storage by 2030 to handle variable solar/wind output.

What is India's Path to 500 GW Non-Fossil Capacity by 2030?

Current progress: At 266 GW in 2025, India needs to add about 47 GW annually, focusing on solar (280 GW target) and wind (140 GW).

Policy support: Initiatives like Green Energy Corridors and incentives under Atmanirbhar Bharat promote domestic manufacturing of solar panels.

Future outlook: Achieving this could eliminate need for new coal, enabling coal phase-down and energy security through diversified sources.

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