Whalesbook
Coal Power Sees Rare Decline
India’s coal-fired power generation decreased by nearly 3% in 2025, marking only the second full-year reduction in over five decades. Crucially, this decline was not triggered by an economic downturn, but by significant structural shifts within the nation’s power system. The analysis comes from the Centre for Research on Energy and Clean Air (CREA).
Record Clean Energy Surge
The drop in coal and gas output reflects a substantial increase in clean electricity sources. CREA found that fossil-based generation had been rising an average of 63 terawatt-hours (TWh) annually between 2019 and 2024. In 2025, however, it reversed, falling by approximately 50 TWh. Clean power generation surged from an average annual increase of 22 TWh (2019-2024) to 71 TWh in 2025.
Renewable energy output rose 22% year-on-year, and large hydropower generation increased by 15%. This clean power growth accounted for 44% of the reduction in coal and gas generation.
Demand Slowdown and Weather Factors
Milder temperatures played a significant role, reducing electricity demand for cooling by an estimated 41 TWh compared to typical conditions. This accounted for 36% of the fossil generation drop. An additional 20% was attributed to a broader, non-weather-related slowdown in power demand growth that commenced in late 2023.
Temperature-adjusted analysis shows this deceleration began prior to 2024's heatwaves, which temporarily masked the trend. With normalized temperatures in 2025, the underlying slowdown became apparent.
Challenges to Coal Expansion
The findings directly challenge the rationale for continued coal capacity expansion, particularly for meeting peak demand. On India's highest demand day in 2025, peak load reached about 242 GW, with only 216 GW of thermal capacity online as 26 GW remained offline for maintenance. Solar generation alone supplied up to 60 GW during daytime peaks.
Even non-solar hour peaks were managed by existing coal capacity combined with renewables and dispatchable sources. CREA stated that clean electricity is increasingly covering demand peaks, rendering new coal capacity additions redundant. Meeting the government’s 2030 target of 500 GW non-fossil capacity would absorb expected demand growth, leaving no room for coal power to grow. Completing the 36 GW of coal projects under construction risks worsening overcapacity, pushing plant load factors lower, increasing financial stress for generators, and raising costs for consumers.