India’s Coal & Gas Decline Signals Accelerating Renewable Energy Transition

India’s energy landscape is at a pivotal crossroads, exemplified by the notable recent decline in coal- and gas-fired power generation, which in May 2025 marked the steepest year-over-year drop since COVID-19. The rapid contraction in coal usage, attributed to an amalgamation of economic slowdowns, surging renewable deployment, and increasingly cost-competitive solar and wind projects, suggests India may finally be reaching a tipping point towards substantial decarbonization. While coal remains deeply embedded within India’s power sector, these developments underscore a trajectory toward a cleaner, more sustainable, and economically resilient energy system.

India’s energy system in 2023, the last year for which full data is currently available, was still heavily fossil-dependent, with coal, crude oil, and natural gas collectively dominating national primary energy supply. Coal, in particular, underpinned nearly half of the total energy input, fueling India’s industrial powerhouse sectors such as steel, cement, and power generation. The inefficiencies associated with coal-fired electricity generation were profound, with roughly two-thirds of coal’s primary energy content dissipating into the atmosphere as waste heat. This loss was not just an environmental concern, but a significant economic and resource inefficiency, driving a compelling argument for transitioning towards more efficient and sustainable energy sources.

The rest of India’s energy mix in 2023 presented a complex blend of traditional biomass, oil-based fuels, and natural gas, alongside growing but still modest contributions from renewables like wind, solar, and hydroelectric power. Despite aggressive policy ambitions for renewable expansion, renewables comprised less than a quarter of electricity generation, highlighting the significant scaling challenge that still lay ahead. Biomass, historically crucial for residential cooking, had gradually declined as LPG access improved, but still accounted for a substantial portion of household energy usage. Transportation, predominantly dependent on imported oil, represented a significant source of both economic vulnerability and environmental impact, given India’s reliance on fossil-fuel-based road transport and rapidly increasing vehicle fleets.

Looking ahead towards a potential energy landscape for 2050, the vision for a fully electrified Indian economy powered predominantly by renewable sources presents a transformative opportunity. Central to this future is a dramatic shift toward wind and solar power, supported strategically by expanded hydroelectricity and maintained nuclear generation at current modest levels. Such an electrified economy would capitalize on substantial efficiency gains inherent in electrification itself, particularly in the transport, residential, and commercial sectors. Electric vehicles, known for their significantly higher energy efficiency compared to internal combustion engines, could dramatically reduce overall transport energy demand. Similarly, widespread adoption of heat pumps with a coefficient of performance around three times that of traditional heating methods would markedly diminish electricity demands for environmental heating and cooling.

Integral to this transition is the explicit utilization of ambient environmental heat, leveraged by heat pumps in residential and commercial sectors, significantly reducing net electricity requirements and thus overall energy system demands. By explicitly tracking and utilizing these ambient energy flows, India could achieve dramatic reductions in primary energy needs, transforming wasteful energy practices into highly efficient end-use applications.

Geothermal energy, particularly when paired with heat pumps, holds significant potential for India’s heating and cooling needs. While much attention is given to high-profile renewable technologies, geothermal systems offer a reliable and efficient solution for thermal energy demands, as I noted in my recent series assessing the technology. By using the stable temperatures beneath the earth’s surface, ground-source heat pumps can provide consistent heating and cooling, reducing reliance on fossil fuels and enhancing energy security. Incorporating geothermal solutions into India’s energy strategy could play a crucial role in achieving decarbonization goals and meeting the country’s growing energy demands sustainably.

Biomass would see a fundamentally altered role in this electrified future, strategically reoriented from widespread inefficient domestic use towards highly focused, sustainable biofuel production for sectors that remain challenging to electrify fully, long-haul aviation and shipping. This targeted use not only preserves valuable agricultural and forestry resources but also maximizes biomass’s value as a niche fuel in critical applications where electrification faces technological and logistical limitations.

The infrastructure underpinning this new energy model would require significant investment in electricity storage and grid modernization to accommodate high penetrations of variable renewable energy. While energy storage systems inevitably introduce some inefficiencies — storage round-trip losses and modest grid losses — such drawbacks remain substantially smaller than the extensive losses characteristic of the current fossil-based system. The overall efficiency and flexibility provided by a modernized grid would facilitate a smooth integration of large-scale renewable energy sources, creating a resilient and responsive energy system capable of balancing supply and demand dynamically.

My own experience engaging with India’s energy transition, including my seminar series with the India Smart Grid Forum (ISGF), has underscored the complexities and immense opportunities inherent in India’s shift towards renewables. Since its foundation, the ISGF has played a critical role in convening stakeholders, policymakers, and technology leaders, fostering dialogue, disseminating best practices, and addressing technical and regulatory barriers to renewable integration and grid modernization. As I noted recently in a discussion, the ISGF was integral to right-sizing batteries to bus routes and electrification of two-and-three wheelers due to its 2010s studies. Through these collaborative efforts, India’s transition toward a sustainable energy economy is gaining critical momentum, catalyzing the kind of systemic changes necessary for deep decarbonization.

India’s climate ambitions have evolved substantially in recent years, reflecting a growing commitment to balancing economic development with environmental sustainability. At COP26, Prime Minister Narendra Modi announced a target for India to achieve net-zero emissions by 2070, accompanied by interim goals such as reducing emissions intensity by 45% from 2005 levels and achieving 50% of electric power from non-fossil-based sources by 2030. These targets have been bolstered by significant investments in renewable energy, with India adding a record 29.52 gigawatts of clean energy in the fiscal year 2024–25, bringing the total installed renewable energy capacity to 220.10 gigawatts as of March 31, 2025. Despite these advancements, challenges remain, including the need for comprehensive planning and transparency in achieving the net-zero target. Nevertheless, India’s proactive approach, including initiatives like the draft Climate Finance Taxonomy to drive capital towards sustainable activities, underscores its dedication to a sustainable future.

In contrast, proposals advocating small modular reactors (SMRs) as a significant component of India’s future energy mix face severe economic, logistical, and practical barriers. While attractive due to their theoretical scalability and modularity, SMRs consistently fail tests of actual economic viability and scalability, burdened by high costs, lengthy development timelines, and persistent regulatory hurdles. SMRs divert critical financial resources and political capital away from more practical, immediate, and cost-effective renewable and storage solutions, thereby delaying necessary progress toward decarbonization. Given these limitations, India’s plans for SMRs appear fundamentally misaligned with the urgency and scale of the country’s actual energy needs and decarbonization goals.

Of course, this has implications for global energy flows. As with China’s reduction in fossil fuel demand and related emissions, not to mention its pivot away from US LNG due to tariffs, India’s reduction bodes poorly for economies like the USA which are hoping to expand exports of oil and gas, if not coal.

Ultimately, India stands at an extraordinary juncture, poised to transform its energy economy from a coal-dependent, fossil-fueled system into a fully electrified, renewables-driven future. Achieving this ambitious vision will require sustained commitment, strategic investments, robust regulatory frameworks, and effective stakeholder collaboration. The economic and environmental benefits of such a transition are clear, compelling, and increasingly within India’s reach. As coal declines and renewable energy ascends, India’s path forward represents not merely an essential response to climate change but a profound opportunity for economic renewal and sustained prosperity.