India’s draft NEP targets 80% non-fossil capacity by 2047, retains coal for baseload

1.0India's coal-fired power "will continue to play a critical role in meeting baseload demand and ensuring the nation's energy security," despite the government's goal to have 80% of installed capacity and nearly two-thirds of total electricity generation from non-fossil sources by 2047, according to the Draft National Electricity Policy 2026 made public Jan. 21.

The policy under public consultation signals sustained demand for domestic coal, particularly as India's electricity consumption is targeted to rise to 2,000 kWh per capita by 2030 and to over 4,000 kWh by 2047, requiring significant additions to firm capacity.

India's updated Nationally Determined Contributions, as highlighted in NEP 2026, set targets to reduce emissions intensity by 45% from 2005 levels and achieve 50% non-fossil fuel capacity by 2030. The country also aims to reach net-zero emissions by 2070, reflecting a commitment to sustainable growth and climate action.

Under the draft policy, new coal-based power plants should preferably be located near coal mines to reduce fuel transportation costs and logistical bottlenecks, while allowing limited capacity near load centers to support grid stability.

The government, in its draft policy, also proposed advance planning of coal evacuation infrastructure, including conveyor belts, pipe conveyors and rail links, to ensure supply chain readiness for thermal generators.

To enable greater renewable integration, the policy calls for retrofitting existing coal-fired plants for flexible operation and equipping them with storage systems, with associated costs recoverable through tariffs, ancillary service charges, or other market mechanisms.

The policy also flagged the possibility of using steam generated by coal plants for district cooling and industrial processes, a measure aimed at improving asset utilization during periods of high renewable generation.

Coal quality monitoring will also be tightened, with automated sampling and stricter standards, and suppliers encouraged to take responsibility for coal quality on an "as-delivered at plant-end" basis to limit efficiency losses from grade slippage.

Moreover, thermal power producers will be required to ensure 100% utilization of ash in eco-friendly applications, continuing regulatory pressure on generators to manage waste even as coal capacity remains in the system.

Domestic coal output crossed the 1 billion-metric-ton mark in the financial year 2024-25 (April-March) and has continued at high levels into 2026, according to data from India's coal ministry, with production and supplies improving and power plant stockpiles rising compared with a year earlier, supporting utility consumption adequacy and reducing reliance on imported coal for blending and power generation.

Output for the calendar year 2025 stood at 1.04 billion mt.

Solar's role

India has achieved over 250 GW of RE capacity (including 50 GW of large hydro), which is more than 50% of the total installed generation capacity, the policy document said. The draft highlights the intermittent nature of these sources and the need for robust integration with firm power sources and energy storage systems.

The framework underscores the urgent need to expand and upgrade intrastate transmission networks to facilitate the seamless integration of solar and other renewables at the state level. This policy aims to reduce reliance on costly inter-state transmission infrastructure, traditionally required to procure renewable energy from distant locations.

A key mandate of NEP 2026 is the complete solarisation of all agricultural feeders by 2030, supported by suitable energy storage solutions to ensure reliable daytime power for farmers. The policy also advocates the solarization of individual agricultural pumps and the deployment of stand-alone solar pumps where necessary, thereby reducing the subsidy burden on state governments.

State commissions are encouraged to implement differential pricing for electricity during peak hours, especially non-solar hours. Additionally, appropriate governments and regulatory bodies shall adopt policies and regulations that maximize the use of renewable energy corridors, particularly during non-solar periods, further enhancing the stability and efficiency of solar power integration into the national grid.

Platts, part of S&P Global Energy, will launch a domestic India Photovoltaic (PV) solar module price assessment series, effective Feb. 26, 2026. The assessments will reflect the price of solar modules, manufactured in India, using the two main cell production pathways: PERC with an output of 520-680 W and TOPCon with an output of 570-720 W, with wafer sizes of 182-210 mm.