India is accelerating its thermal power expansion strategy as electricity demand continues to grow, with the Central Electricity Authority (CEA) projecting a major increase in coal and lignite capacity by 2034-35.
The generation expansion planning study conducted by the CEA evaluates the optimal mix of power generation resources including coal, hydro, solar, wind, storage and nuclear. The study considers capital cost, fuel expenses, operations and maintenance, plant life and demand projections to determine the most cost-effective energy mix for the country.
India targets 3,07,000 MW thermal capacity by 2035
According to the Ministry of Power, India’s thermal capacity requirement is projected to reach around 3,07,000 MW by 2034-35, compared with 2,11,855 MW installed capacity as of March 31, 2023. To bridge this gap, the government has planned to add a minimum of 97,000 MW of new coal and lignite-based power capacity.
Progress on this expansion is already underway:
17,360 MW of thermal capacity has been commissioned since April 2023
39,545 MW is currently under construction, including 4,845 MW of stressed projects
Contracts have been awarded for 22,920 MW of new projects
24,020 MW of additional coal and lignite projects are in planning stages
These additions are aimed at ensuring reliable baseload power as renewable energy capacity continues to grow.
Coal plant utilization projected at 61 percent PLF
The CEA estimates that the Plant Load Factor (PLF) of coal-based power plants will reach around 61 percent by 2031-32. However, actual utilization will depend on demand growth, renewable energy deployment and fuel availability.
The generation expansion model compares coal plants with renewable energy and storage technologies by analyzing cost, generation profiles, operational characteristics and storage duration requirements.
Coal power tariffs and cost comparison with renewables
Electricity costs from coal plants vary depending on plant life, distance from coal mines and technology type such as sub-critical or super-critical units.
Key tariff insights include:
Weighted Average Rate of Sale of Power from existing coal plants: INR 4.36 to INR 4.58 per kWh over the last three years
Lowest tariff from existing coal plants: about INR 1.52 per kWh
Tariffs for new coal projects via tariff-based competitive bidding in 2025: INR 5.38 to INR 6.30 per kWh
Firm and dispatchable renewable energy tariffs discovered by SECI (Aug 2024): INR 4.98 to INR 4.99 per kWh
While these tariff ranges appear comparable, the government noted that coal and firm renewable projects serve different grid requirements. Coal plants provide stable, dispatchable baseload power, while firm renewable energy involves different risk allocation, operational characteristics and cost structures.
Government reiterates balanced energy mix strategy
The government emphasized that coal-based power remains essential for grid reliability even as India rapidly expands renewable energy capacity. The expansion strategy is designed to ensure energy security, reliability and affordability while meeting rising electricity demand, according to information shared by Minister of State for Power Shripad Naik in a written reply in the Rajya Sabha.
