No valid economic rationale for shutting down coal plants in India: Economic Survey

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The Economic Survey 2024-25, tabled before the Parliament, has highlighted that coal has an important role to play in India’s sustainable development and it cannot be neglected as a reliable and affordable source of energy for India’s development.

The official document noted that India will need to implement innovative strategies and robust implementation plans to confront both the challenges posed by climate change and the need for sustainable development to take centre stage. The comments come as the government has a net-zero target by 2070.

The survey highlights that "there is no valid economic rationale for shutting down coal plants in India, as this would leave significant investments underutilized and stranded, without a dependable alternative in place." Unlike developed nations such as the United States, where most coal-fired capacity was built between 1950 and 1990, India saw the bulk of its coal-based power capacity additions only in the 2010s, according to the survey.

India added almost 4 gigawatts of coal-fired capacity in 2024, about the same as in 2023, according to the Central Electricity Authority. With peak electricity demand having gone up from 136 GW In 2014 to more than 250 GW today, the government is racing to add additional power capacity. The country has 27 GW of thermal power capacity under construction, about 12 GW which has been bid out and another 19 GW is under various stages of clearance. By 2030, the Ministry of Power aims to add 90 GW of thermal power capacity.

The capacity additions come as India's power sector is experiencing a significant surge in demand. In May last year, the country recorded peak demand of 250 GW.

Meanwhile,  India has made significant strides in promoting renewable energy and boosting domestic manufacturing of renewable energy equipment through initiatives such as the Production-Linked Incentive (PLI) scheme.  By the end of December 2024, the country's total renewable energy installed capacity increased by 15.8 per cent year-onyear, reaching 209.4 GW, up from 180.8 GW in December 2023. Renewable energy now constitutes about 47 per cent of India's total installed capacity, according to the survey.

However, the survey notes that to strengthen its renewable energy initiatives, India must prioritise investment in extensive grid infrastructure improvements and the secure sourcing of critical minerals necessary for this shift.