For the first time in nearly five decades, coal-fired electricity generation in India recorded a year-on-year decline in 2025. This shift, driven primarily by the rapid expansion of renewable energy, marks a potentially significant inflection point in India’s energy transition — with implications for climate policy, power planning, and global emissions trajectories.
What exactly happened in 2025?
According to a new study by the Centre for Research on Energy and Clean Air, coal-fired power plants in India generated about 1,283 billion units of electricity in 2025, around 3% lower than the 1,322 billion units produced in 2024. This decline occurred even as total electricity generation in the country rose by about 1%, indicating that coal lost relative and absolute ground in meeting India’s power demand.
While coal generation had dipped earlier in 2022, that fall was largely attributed to the Covid-induced slowdown in industrial activity. The 2025 decline, by contrast, reflects structural changes in the power sector rather than a temporary shock.
A slowing coal trajectory even before the dip
The decline did not come out of nowhere. Over the past few years, the growth rate of coal-based electricity had already been decelerating. In 2023, coal generation grew by about 15%, but this slowed sharply to around 5% in 2024. The 2025 decline thus fits into a broader pattern of weakening coal dependence, even when absolute generation numbers were previously rising.
The renewable surge reshaping the power mix
The most important driver behind coal’s decline has been the rapid expansion of renewable energy. In 2025, electricity generation from renewable sources rose by about 22%, increasing from 221 billion units in 2024 to around 270 billion units. Large hydropower also registered strong growth of about 15%.
Installed capacity additions underline this trend. Around 41 GW of new renewable capacity was added in just the first 11 months of 2025, significantly enhancing the ability of clean energy to meet both base and peak demand.
Demand-side and climate factors at play
Apart from renewables, other factors also contributed to the coal dip. A relatively milder summer reduced peak cooling demand, while overall electricity demand growth moderated for economic and structural reasons. Together, these factors reduced the pressure to ramp up coal generation, even during high-demand periods.
Do we still need more coal capacity?
The CREA study raises important questions about India’s future coal plans. Given the existing coal fleet, plants already under construction, and a large pipeline of renewables and energy storage projects, the study suggests that significant new coal capacity may not be necessary to meet India’s electricity demand by 2030.
Crucially, data shows that even on days of highest electricity demand, the entire coal fleet is not fully utilised, with renewable energy increasingly supporting peak-hour supply — a role traditionally reserved for thermal power.
Emissions implications for India and the world
The shift has important climate implications. In an earlier analysis for Carbon Brief, CREA found that India’s power-sector carbon dioxide emissions declined in the first half of 2025 compared to the same period a year earlier — the first such half-yearly drop on record. While full-year emissions data is awaited, the trend is noteworthy, especially since the power sector accounts for roughly 40% of India’s total greenhouse gas emissions.
A parallel moment in China
India is not alone. A similar CREA study found that coal-based electricity generation in China fell by about 1.6% in 2025 — also the first annual decline in roughly 50 years. As the world’s largest emitter, China’s shift is particularly significant. Together, the power sectors of India and China accounted for about 93% of the increase in global CO₂ emissions between 2015 and 2024, making recent changes in both countries globally consequential.
Why this moment matters
The parallel declines suggest that both India and China may now have the preconditions to peak coal-fired power generation. This does not mean coal will disappear soon, but it signals that the era of relentless coal growth may be ending. For India, the challenge ahead lies in managing this transition — ensuring grid stability, accelerating storage deployment, and addressing the social and regional impacts of reduced coal dependence.
What to note for Prelims?
- First year-on-year decline in India’s coal-fired power generation: 2025
- Key institution: Centre for Research on Energy and Clean Air (CREA)
- Role of renewables and hydropower in offsetting coal
- Power sector’s share in India’s greenhouse gas emissions (~40%)
What to note for Mains?
- Analyse the structural factors behind the decline in coal-based electricity generation in India
- Discuss whether India needs new coal capacity in the context of rapid renewable expansion
- Examine the implications of India and China peaking coal power for global climate action
- Evaluate challenges in ensuring grid reliability during the energy transition
