Rajasthan Could Save INR 8,500 Crore by Choosing RE and Storage Over New Coal: CEEW

The new study by the Council on Energy, Environment and Water (CEEW), recently released, revealed that Rajasthan could save up to INR 85 billion in power procurement costs in 2030 by meeting its emerging reliability needs through Renewable Energy (RE) and storage rather than new coal capacity. 

The study, How Should Indian States Choose New Power Generation Capacity? A Case Study of Rajasthan, assesses a February 2025 proposal by Rajasthan distribution companies (discoms) to contract for 3,200 MW of new coal capacity to address projected shortages. CEEW finds that Rajasthan's 2030 shortfall is fundamentally a timing and flexibility problem, not just a capacity one. Nearly 90 percent of the projected 5.5-billion-unit deficit occurs during non-solar hours, when solar generation is unavailable,  and the system needs resources that can respond swiftly to demand. Using 15-minute production-cost simulations for 2030, the study compares three pathways — business-as-usual, adding 3,200 MW of new coal, and an equivalent energy provided by an RE-plus-storage combination of solar, wind, and battery storage — to determine which best meets Rajasthan’s needs at the lowest cost.

Disha Agarwal, Fellow, Council on Energy, Environment and Water (CEEW), said, “Discoms should evaluate options based on grid needs and overall system cost, rather than technology-level costs alone. Our analysis shows that RE-plus-storage can meet Rajasthan’s future reliability needs at lower cost than the proposed coal capacity. SECI’s recent round-the-clock RE bid discovered a tariff lower than recently contracted or proposed new coal capacity in several states. Such studies establish the need for planning exercises that states must undertake continuously as technology capabilities and costs change rapidly and demand becomes more uncertain.”

Replacing new coal with RE-plus-storage in Rajasthan could generate net savings of INR 11.4 -- 85 billion in 2030, and help discoms earn around INR 35 billion in additional revenue by selling surplus power in the exchanges, the CEEW study finds.

The clean pathway could create approx 27,000 Full-Time-Equivalent (FTE) jobs by 2030, against 2,560 under new coal, while attracting around INR 600 billion in clean energy investment. It would also cut the state's power-sector CO₂ emissions by 24 per cent, to 52 million tonnes against 68 million tonnes under new coal — relevant given Rajasthan's electricity requirement grew at 8 percent CAGR between FY22 and FY25, with demand projected to reach 1.5 times FY25 levels by FY30.

The Rajasthan case points to a wider planning gap. The CEEW study finds that 3,200 MW of new coal capacity — designed to generate over 20 billion units annually to address a 5.5-billion-unit deficit — would still leave around 1 percent of demand unmet, short of the Central Electricity Authority's 0.05 per cent reliability benchmark. Elsewhere, recent state procurements show a similar disconnect: Bihar and Assam contracted 5,600 MW of new coal capacity in 2025 at fixed costs of INR 4.17–4.54 per unit, even though the underlying planning studies assumed capex that implied fixed costs of under INR 2.55 per unit for the same technology.

CEEW recommends that state discoms institutionalise scenario-based integrated resource planning, that procurement frameworks target least-cost outcomes at the system-level by allowing all mainstream technologies to compete, and that state regulators build the technical capacity to evaluate procurement proposals independently.