India's energy sector saw a historic shift in 2025 as coal-fired power generation fell by 3% for the first time in half a century, except during the COVID-19 pandemic, according to analysis by the Centre for Research on Energy and Clean Air (CREA). This decline was largely attributed to a record increase in clean power generation, with solar and wind energy taking a more significant role.

However, coal's diminishing share was hindered by the inflexibility of existing coal plants, which limits the country's ability to fully integrate its growing renewable capacity.

The drop in coal power was driven by a variety of factors, including reduced air conditioning demand and a long-term slowdown in power demand growth. Despite the positive shift in the energy mix, India's existing coal-fired power plants lack the flexibility needed to integrate solar power efficiently.

These inflexible plants struggled to reduce output during daylight hours when solar generation peaks, and they are slow to ramp up after sundown when renewable energy production wanes.

As a result, India lost 2.3 TWh of solar energy between May and December 2025 due to grid curtailments designed to maintain system stability. This curtailed energy represented a loss of between 5.75 billion crore ($62.7 million) and 6.9 billion crore rupees in compensation for solar generators, according to Ember, an energy think tank.

This issue also presented a significant challenge to India's climate ambitions, particularly its goal to derive half of its energy from renewables by 2030. The curtailment of solar power led to carbon dioxide emissions equivalent to the annual emissions of 400,000 households, further complicating India's transition to a low-carbon energy system.

Despite India having around 514 GW of installed capacity, with half coming from renewables, only 23% of the country's energy needs are currently met by clean power. States also struggled to meet renewable purchase obligations, with many falling short of the targets set by the national government.

While renewable energy is growing, coal remains the dominant source of electricity in India, with nuclear and hydro playing a smaller role. The introduction of a national grid code formalized a minimum load of 55% for coal plants, meaning they must run even when renewables are available. Coal plants are compensated for the hours they do not generate electricity, though this strategy is seen as inefficient and costly in the long term.

India's goal to run coal plants at 40% of installed capacity during the day is a key step toward balancing coal and renewables, but experts warned that this could damage plant infrastructure and reduce the lifespan of coal plants by a third or more.

Plants that have not been well-maintained may also be unsuitable for such modifications, potentially leading to further operational inefficiencies, analysts said.

Moreover, the low quality of India's coal, with its high ash content, further complicated the flexibilization process. Indian coal plants often rely on oil as a backup, which increases costs and undermines the potential savings from reducing coal generation during peak solar hours.

The falling price of renewable energy storage is challenging the economics of coal-based power. Solar power combined with battery storage is now often cheaper than coal-based electricity, costing around 4-5 rupees/kWh compared to 5-6 rupees for new coal plants. This shift makes coal power increasingly less attractive as the primary source of energy.

Looking ahead, experts warned that India's energy transition will require more than just incremental improvements in coal power flexibility. A regulatory overhaul is needed to address the challenges posed by coal's ongoing dominance and to tap into the country's vast renewable potential.

This will likely involve changing how coal plants are compensated and ensuring that the incentives are aligned with the broader goal of reducing emissions and increasing renewable energy integration.

Without such a shift, India may struggle to meet its renewable energy targets while also balancing the demand of energy security and economic growth.