Rajasthan Can Save INR 57,000 Crore in a Decade by Replacing New Coal Capacity with Solar and Storage: Sunrise State Report

While rising electricity demand due to extreme heat and Iran war–related energy disruptions have boosted coal use, a new report finds significant savings potential in Rajasthan’s electricity generation sector by shifting away from the expensive fuel. Rajasthan can save about INR 5,500 crore annually and up to INR 57,000 crore over a decade as a result of lower power costs by avoiding new coal-based power generation. 

The report Sunrise State by Bengaluru based think tank Climate Risk Horizons has found that solar power and 8-hour Battery Energy Storage Systems (BESS) can deliver power in the state at nearly half the cost of new coal-based generation. 

Coal power costs are escalating across the board, with both capital and operational expenses increasing by more than 30 percent between 2020 and 2025. 

Harshit Sharma, Lead Author of the report, stated, “With rising coal power costs, tariffs are projected at INR 10.27/kWh by 2031. This will lock the state into expensive and polluting power generation, expose consumers to high electricity tariffs and limit access to abundant, low-cost RE. We recommend pairing solar PV with 8-hour BESS as an alternative that can deliver up to 18 hours of renewable power at INR 5.48/kWh–INR 5.87/kWh, which is roughly half the cost of new coal-based power”  

With 18 hours covered, the residual demand of six hours can be met by existing thermal capacity. At this level of savings, the report estimates, the additional capital expenditure required for solar plus BESS will be recouped between 1.5 to 2 years.  

Rajasthan leads in solar capacity across the country but has tapped only ~5 percent of its renewable potential. While renewables account for up to 49 percent of electricity generated within the state, the report finds that consumers are not benefiting from the abundant, cheap solar resources. Less than 24 percent of the state’s anticipated energy demand this financial year will be met through renewables, while renewable curtailment levels are expected to remain high. In 2025, curtailment reached over 50 percent on some days. 

According to the Central Electricity Authority’s (CEA) Resource Adequacy Plan (RAP), Rajasthan has 2,535 MW of coal capacity under construction or planned by 2029–30. The RAP report projects an additional need for 1,905 MW of coal capacity over the next decade, alongside 16.8 GW of additional renewable energy, supported by 13.2 GW of 4-hour and 6-hour battery energy storage systems. With 1,350 MW of thermal capacity set for retirement by 2030, the net thermal requirement would increase to 3,255 MW. 

Ashish Fernandes, Co-Author of the report, said, “This analysis demonstrates that pairing solar PV with 8-hour BESS offers a compelling alternative to new coal capacity. Beyond cost advantages, this approach enhances grid flexibility, reduces curtailment, and aligns with India’s energy security goals and Net Zero commitments. We recommend prioritising solar PV + BESS to meet all growth in power demand in the state, at a significant net benefit to consumers.”  

The report highlights that accelerating the deployment of 8-hour BESS, beyond the current 4-hour configurations, will help augment daytime solar generation and extend supply into non-solar hours, enabling up to 18 hours of RE supply per day. This will help manage peak demand, reduce reliance on thermal power for balancing, and enhance overall grid reliability. The report further recommends leveraging financial tools like Viability Gap Funding to reduce upfront costs and further improve the commercial attractiveness of battery storage projects.