India’s Energy Transition: Why the Green Shift Still Runs on Coal?

Syllabus: GS3/Energy

Context

• The recent escalation of conflict in West Asia and the resulting rise in global crude oil and LNG prices have once again highlighted India’s vulnerability to external energy shocks.
• Nearly half of India’s fossil fuel imports transit through the Strait of Hormuz, including crude oil from Saudi Arabia and LNG imports from Qatar.

Key Trends in India’s Energy Sector

• Renewable energy accounted for 42.4% of installed power capacity by March 2026, compared to just 0.72% in 2005.
• Coal’s share in installed capacity declined from 58.7% in 2005 to 42.2% in 2026.
• Since 2017, renewable energy has contributed the largest share of new capacity additions.
  • However, installed capacity does not translate into actual electricity generation.
• In April 2026, renewables generated only 15.8% of electricity. Coal still contributed around 71.8% of total electricity generation.
  • It reveals that renewable energy is being added alongside coal rather than replacing it.

Why Coal Still Dominates?

• Baseload Requirement: Coal provides continuous and reliable electricity needed for industries, railways and urban centres.
• Intermittency of Renewables: Solar and wind power depend on weather conditions and time of day.
• Lack of Storage Infrastructure: India still lacks adequate battery storage and pumped hydro systems.
• Grid Limitations: Existing transmission systems are not fully capable of integrating large-scale renewable power.
• Slow Retirement of Coal Plants: Very few old coal plants have been phased out.
  • As a result, coal acts as the balancing source whenever renewable output declines.

Need for Energy Transition in India

• Energy Security: India imports over 85% of its crude oil needs. Dependence on imported fossil fuels exposes the economy to geopolitical disruptions and price volatility.
• Climate Commitments: Under the Paris Agreement and India’s Panchamrit goals announced at COP26, India has committed to:
  • Achieving 500 GW non-fossil fuel capacity by 2030
  • Reducing emissions intensity
  • Achieving net-zero emissions by 2070
• Reducing Inflationary Pressures: Global spikes in oil and coal prices directly affect electricity tariffs, transport costs, industrial production, and fiscal deficit.
  • A stronger renewable system can reduce such external shocks.
• Sustainable Economic Growth: Clean energy sectors generate employment in solar manufacturing, green hydrogen, battery storage, and EV ecosystem.
• Environmental Protection: Coal-based power contributes significantly to air pollution, greenhouse gas emissions, and public health burden.
  • Thus, energy transition is necessary for sustainable development.

Concerns, Challenges and Issues in India’s Energy Transition

• Capacity vs Generation Gap: There is a mismatch between renewable installed capacity and actual generation.
  • Large installed capacity figures create an impression of transition, but coal still dominates real electricity supply.
• Intermittent Nature of Renewables: Solar and wind power cannot ensure uninterrupted supply without storage systems, flexible grids, and demand management.
• High Cost of Energy Storage: Battery storage remains expensive and technologically dependent on imports.
• Grid Modernisation Challenges: India’s transmission infrastructure requires significant upgrades for renewable integration, cross-state transmission, and smart grid management.
• Financial Stress in DISCOMs: State electricity distribution companies suffer from high losses, delayed payments, and weak financial health.
  • It affects renewable power procurement.
• Coal Dependency of Key Sectors: Sectors like steel, cement and heavy industries still rely heavily on coal.
• Geopolitical Vulnerability: Even domestic electricity prices remain indirectly linked to global fossil fuel markets because coal determines the marginal cost of power generation.

Related Government Efforts and Initiatives

• National Solar Mission: Launched under the National Action Plan on Climate Change (NAPCC), it aims to promote solar energy deployment.
• PM-KUSUM Scheme: Promotes solar pumps and decentralised renewable energy in agriculture.
• Green Energy Corridor Project: Focuses on strengthening transmission infrastructure for renewable integration.
• National Green Hydrogen Mission: Aims to make India a global hub for green hydrogen production.
• Production Linked Incentive (PLI) Scheme: Encourages domestic manufacturing of solar modules, and advanced chemistry batteries.
• International Solar Alliance (ISA): India-led initiative promoting global solar cooperation.
• Faster Adoption and Manufacturing of Electric Vehicles (FAME): Supports electric mobility and reduction in oil dependence.

Way Forward: What More Needs to be Done?

• Expand Energy Storage Infrastructure: Large-scale investment is needed in battery storage, pumped hydro storage, and grid-scale backup systems.
• Modernise the Electricity Grid: India needs to build smart grids, flexible transmission networks, and real-time power balancing systems.
• Gradual Coal Transition Strategy: Instead of abrupt shutdowns, India should retire inefficient plants, improve efficiency of existing plants, and ensure just transition for coal-dependent regions.
• Strengthen Domestic Manufacturing: Reducing import dependence in solar modules, lithium batteries, and rare earth materials is essential for energy security.
• Promote Green Mobility: Expansion of EV infrastructure and public transport can reduce oil imports.
• Reform DISCOMs: Financially stable DISCOMs are critical for scaling renewable procurement.
• Diversify Energy Sources: India should expand nuclear energy, bioenergy, offshore wind, and green hydrogen.

Source: TH