Why India’s Coal Power Fell in 2025 — And What It Signals for the Energy Transition

For the first time in nearly five decades, coal-fired electricity generation in India declined year-on-year in 2025. The shift, documented by the “Centre for Research on Energy and Clean Air (CREA)”, marks a quiet but consequential moment in India’s energy trajectory — one driven not by policy shock, but by the steady rise of renewables and changing demand dynamics.

What the numbers from 2025 reveal

Coal-fired power plants generated 1,283 billion units of electricity in 2025, down 3% from 1,322 billion units in 2024, even as total electricity generation grew by around 1%. This divergence is significant: it means rising power demand was met without increasing coal output.

The decline is notable because, unlike the brief dip in 2022 — which coincided with pandemic-related disruptions — the 2025 fall reflects structural change. In fact, even when coal generation rose in absolute terms in recent years, its growth rate had been slowing: from 15% in 2023 to 5% in 2024, before turning negative in 2025.

The renewable surge behind coal’s slowdown

The primary driver of this shift was the rapid expansion of clean energy. Renewable electricity generation rose by 22% in 2025, reaching 270 billion units compared to 221 billion units the previous year. Large hydro generation also increased sharply, by 15%, to 180 billion units.

Installed capacity trends reinforce this picture. India added 41 GW of new renewable capacity in just the first 11 months of 2025, strengthening the system’s ability to meet demand without relying on coal, particularly during peak hours.

Demand-side factors also played a role

CREA’s analysis notes that supply-side change was complemented by softer demand pressures. A relatively milder summer reduced cooling-related electricity demand, while overall power demand growth slowed for other macroeconomic reasons.

Together, these factors reduced the need to dispatch coal plants, even during periods of high load — a development that challenges long-held assumptions about coal’s indispensability for grid stability.

Do India’s coal expansion plans still make sense?

One of the study’s most consequential conclusions concerns future capacity planning. Given the existing coal fleet, plants already under construction, and the scale of renewable and storage projects in the pipeline, CREA argues that “significant new coal additions are not required” to meet India’s electricity demand by 2030.

Crucially, system data shows that even on the highest demand days, the full coal fleet is not needed. Renewables are increasingly contributing during peak hours — a role once thought to be coal’s exclusive domain.

What this means for emissions

The implications extend beyond electricity supply. In a separate analysis for “Carbon Brief”, CREA found that India’s power-sector carbon dioxide emissions declined in the first half of 2025 compared to the same period a year earlier — the first such half-yearly drop on record.

While full-year emissions data for 2025 is still awaited, the trend is significant given that India is the world’s third-largest greenhouse gas emitter, with the power sector accounting for roughly 40% of total emissions.

China’s parallel shift — and the global context

India is not alone. CREA’s research shows that coal-based electricity generation in China fell by 1.6% in 2025 — also the first annual decline in around 50 years. As the world’s largest emitter, China’s power sector choices carry global weight. Beijing has since announced plans to rein in emissions, targeting reductions of 7–10% from peak levels by 2035.

Together, India and China accounted for 93% of the increase in global CO₂ emissions from 2015 to 2024. That both now show signs of peaking coal power has major implications for global climate trajectories.

Why this moment matters — cautiously

The 2025 data does not mean coal is finished in India. Coal still dominates the power mix, and demand growth could revive pressure on thermal generation. But the decline marks a structural inflection: renewables are no longer just supplementing coal — they are beginning to displace it at the margin.

For policymakers, the message is clear. Planning for the next decade must account for faster-than-expected clean energy uptake, storage integration, and demand-side shifts. For the climate, the signal is even more important: the preconditions for peaking coal-fired power in the world’s two largest coal consumers are now firmly in place.