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India Doesn’t Need More Coal Plants Beyond NEP 2032 Targets, Says Ember Report

India’s current renewable and storage capacity targets under the National Electricity Plan (NEP) 2032 will be sufficient to meet future reliability and peak demand needs, making any additional coal plant construction unnecessary and uneconomical, according to a new report by energy think tank Ember.

The analysis concludes that if India meets its NEP 2032 targets for solar, wind, and energy storage, expanding coal capacity beyond planned levels will not be required for either grid reliability or peak power coverage.

Using a least-cost operations model, Ember found that by FY 2031–32, around 10% of new coal units built from FY 2024–25 will remain completely unutilized, while nearly 25% of the existing coal fleet will operate at significantly reduced utilization levels.

The report projects that coal-based electricity could become 25% more expensive by FY 2031–32 compared to FY 2024–25, as lower utilization rates drive up fixed costs, part-load inefficiencies, auxiliary consumption, and retrofit expenses.

“India’s power system is entering a new phase of transition. As renewables expand their share in the generation mix and storage technologies become more affordable, coal’s role continues to shrink. Building beyond the current pipeline is neither necessary nor economical,” said Neshwin Rodrigues, Senior Energy Analyst – Asia at Ember.

The report highlights that Firm and Dispatchable Renewable Energy (FDRE) solutions — combining renewables with battery storage — are already proving cost-competitive, with tariffs between Rs4.3–5.8/kWh and reliable performance in meeting grid demands. This makes it possible for India to ensure flexibility and reliability without resorting to new coal projects.

Falling battery costs, large-scale auctions, and advances in storage technology have further strengthened this shift. Dave Jones, Ember’s Chief Analyst, emphasized the long-term benefits:

“Grid-scale batteries are becoming central to India’s energy security. Their lifetimes now span decades, and new sodium-ion technologies eliminate the need for critical minerals, enhancing resilience and self-reliance.”

Meanwhile, coal power is becoming increasingly uneconomical. Recent tariffs have exceeded Rs6/kWh in Bihar and about Rs5.85/kWh in Madhya Pradesh, despite both states’ proximity to coal-producing regions. Much of this cost stems from high fixed charges, often above Rs4/kWh, which could climb even higher as Plant Load Factors (PLFs) decline.

Ember’s model warns that at lower PLFs expected in FY 2031–32, coal tariffs could escalate to Rs7.25/kWh for distribution companies (DISCOMs), creating stranded assets that remain underutilized but continue to accrue servicing obligations.

The report urges policymakers to accelerate energy storage deployment, retrofit select thermal plants for greater flexibility, and strengthen dispatch and reserve mechanisms to enable renewable integration at the lowest cost.

It also predicts that coal plant load factors will drop from 69% in FY 2024–25 to 55% by FY 2031–32, as coal transitions from a baseload source to a flexible balancing role. The coal fleet, it notes, will need to ramp up or down by 70–80 GW daily — operating just above technical minimum levels — further increasing both fixed and operating costs under long-term Power Purchase Agreements (PPAs).