India has reaffirmed its commitment to achieving approximately 50 percent of its electric power installed capacity from non-fossil fuel-based energy resources by 2030, as announced by the government. Currently, India has reached 45.5 percent of its installed capacity from non-fossil fuel sources.
To reduce dependency on coal-based thermal power plants, the government plans to significantly increase non-fossil fuel-based electricity generation capacity. This shift is projected to require an investment of Rs 667,200 crore by 2031-32.
Minister of State for Power, Shripad Naik, revealed in the Rajya Sabha that the estimated capital cost for new coal-based thermal capacity, according to the National Electricity Plan, is Rs 8.34 crore per MW. Therefore, adding the necessary thermal capacity will involve a minimum expenditure of Rs 667,200 crore by 2031-32.
The Central Electricity Authority (CEA) conducted generation planning studies to meet the projected electricity demand by 2031-32. The results indicate that coal and lignite-based installed capacity will need to reach 283 GW, up from the current 217.5 GW. Consequently, the government aims to establish at least an additional 80 GW of coal-based capacity by 2031-32.
To support this expansion, the government has allowed 100 percent foreign direct investment (FDI) under the automatic route and waived Inter-State Transmission System (ISTS) charges for the inter-state sale of solar and wind power for projects commissioned by June 30, 2025.
Additionally, the Ministry of Power has issued a policy for utilizing biomass in power generation through co-firing in coal-based plants. This policy mandates 5-7 percent co-firing of biomass, primarily agro residue, with coal, after evaluating technical feasibility.
India’s efforts highlight its dedication to transitioning towards a more sustainable and diversified energy portfolio while still addressing the growing electricity demands.
