Building New Coal Plants Beyond NEP 2032 Targets Unnecessary and Uneconomical for India: Ember
Renewable energy and storage capacity targeted under India’s National Electricity Plan (NEP) 2032 will be sufficient to meet future reliability and peak demand needs, eliminating the need for additional coal plants, according to a new report by energy think tank Ember.
October 29, 2025. By Mrinmoy Dey
Ember’s analysis using a least-cost operations model finds that for FY 2031-32, if India meets its NEP targets for renewable energy and storage, 10 percent of additional coal units from FY 2024-25 will be entirely unutilised by FY 2031-32, while nearly 25 percent of the fleet will be heavily underutilised.
Ultimately, coal-based electricity will get 25 percent more expensive in FY 2031-32 than in FY 2024-25, owing to falling utilisation rates driving up fixed costs and expenses associated with additional part-load inefficiencies, higher auxiliary consumption, and retrofit needs, the report noted.
“India’s power system is entering a new phase of transition. As renewables gain a bigger share of the country’s generation mix and storage becomes cheaper, coal’s role diminishes. Building coal beyond the current pipeline is neither necessary nor economical for the country,” said the report’s author, Neshwin Rodrigues, Senior Energy Analyst – Asia at Ember.
Firm and dispatchable renewable energy (FDRE) options — renewable energy coupled with battery storage — are becoming increasingly competitive, with tariffs between INR 4.3–5.8/ kWh and a proven ability to meet availability and performance obligations. As a result, India can achieve reliability and flexibility without resorting to new coal builds.
This has been driven partly by the success of large-scale auctions, falling prices and improvements in battery technology.
Highlighting the fast-changing dynamics of grid-scale batteries and their importance to India’s future electricity system, being self-reliant and resilient, Ember’s Chief Analyst, Dave Jones, remarked that their lifetime runs into decades and the latest sodium-ion batteries use zero critical minerals.
Already, coal-based electricity has become prohibitively expensive, with recently discovered tariffs above INR 6/kWh in Bihar and around INR 5.85/kWh in Madhya Pradesh, despite both states being located close to coal-producing regions. Much of this escalation is driven by very high fixed costs, often exceeding INR 4/kWh.
Lower PLFs in FY 2031-32 can send such tariffs soaring. For example, a cost of INR 6/kWh can effectively rise to INR 7.25/kWh for an electricity distribution company (DISCOM) when adjusted for the utilisation levels reflected in Ember’s model. The higher fixed costs further exacerbate the challenge, leading to stranded power assets that are seldom dispatched yet continue to incur servicing obligations.
The report recommends prioritising acceleration of storage deployment, retrofitting select thermal plants for deeper flexibility, and strengthening dispatch and reserve frameworks to support renewable integration at least cost.
The report finds that utilisation rates or plant load factors (PLFs) of Indian coal plants will fall to 55 percent in FY 2031-32 from 69 percent in FY 2024-25, as coal shifts from being a baseload provider to a flexible balancing resource.
Further, the coal fleet will be required to routinely swing by 70–80 GW between morning and mid-day, operating only slightly above its technical minimum. Lower PLFs and higher flexing requirements will increase both the per unit capacity-carrying (fixed) and operating costs for coal under power purchase agreements (PPAs), noted the report.
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