In a concerted effort to meet the projected electricity demand by 2031-32, the Central Electricity Authority (CEA) has conducted comprehensive generation planning studies. The findings indicate a critical need for expansion in the coal and lignite-based power generation sector. To address the base load requirements of the country, the Government of India has projected the necessity for an additional 80 GW of coal-based power capacity by 2031-32. This is in response to the anticipated increase in demand, which requires a coal and lignite-based installed capacity of 283 GW, up from the current 217.5 GW.
The estimated capital expenditure for establishing this new coal-based thermal capacity, as outlined in the National Electricity Plan, is approximately Rs 8.34 crore per MW at the 2021-22 price level. Thus, the proposed capacity expansion is expected to necessitate an investment of around Rs. 6,67,200 crore by 2031-32.
Enhancing Non-Fossil Fuel Capacity
In parallel with the expansion of thermal power capacity, the Government of India remains committed to reducing its reliance on fossil fuels. India has pledged, under its Intended Nationally Determined Contributions (INDCs), to achieve around 50 percent of its cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. As of now, the country has already achieved 45.5 percent of its installed capacity from such resources. To reach this ambitious goal, several initiatives have been undertaken to promote renewable energy generation across the nation.
Key measures include permitting 100 percent Foreign Direct Investment (FDI) under the automatic route for renewable energy projects, waiving Inter-State Transmission System (ISTS) charges for inter-state sales of solar and wind power for projects commissioned by 30 June 2025, and setting a clear trajectory for Renewable Purchase Obligations (RPO) up to 2029-30. Additionally, the government is establishing Ultra Mega Renewable Energy Parks to provide essential infrastructure like land and transmission connectivity to renewable energy developers.
Other significant schemes include the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM), Solar Rooftop Phase II, and the 12,000 MW CPSU Scheme Phase II. These initiatives are designed to encourage the installation of renewable energy projects at a large scale. The Green Energy Corridor Scheme is also being implemented to lay new transmission lines and create new sub-station capacity, facilitating the evacuation of renewable power.
To standardize the deployment of solar photovoltaic systems and devices, the government has notified specific standards. Additionally, a Project Development Cell has been set up to attract and facilitate investments, and standard bidding guidelines for tariff-based competitive bidding for procurement of power from grid-connected solar PV and wind projects have been established.
Green Energy and Policy Measures
To ensure timely payments to renewable energy generators, the government has mandated that power dispatch be made against a Letter of Credit (LC) or advance payment. The Promoting Renewable Energy through Green Energy Open Access Rules 2022 and the launch of the Green Term Ahead Market (GTAM) aim to facilitate the sale of renewable power through exchanges. Moreover, the National Green Hydrogen Mission, launched to position India as a global hub for the production, utilization, and export of Green Hydrogen and its derivatives, is a cornerstone of India’s renewable energy strategy. The government has also announced a prescribed trajectory for renewable energy power bids, setting an annual target of 50 GW of RE bids from FY 2023-24 to FY 2027-28.
Emission Reduction Initiatives for Thermal Power Plants
The Government of India is also focusing on reducing emissions from thermal power plants. The Ministry of Environment, Forest and Climate Change (MoEF&CC), through a notification dated December 7, 2015, and subsequent amendments, has set stringent norms to reduce stack emissions such as Suspended Particulate Matter (SPM), Sox, and NOx from coal-based thermal power plants. To comply with these standards, plants are adopting advanced technologies like Electrostatic Precipitators (ESP), Flue Gas Desulfurization (FGD), and NOx Combustion Modification.
Furthermore, the promotion of installing efficient Supercritical and Ultra Supercritical units over traditional subcritical thermal units is a key focus area. Additionally, the Ministry of Power has issued a policy promoting the co-firing of biomass, primarily agro residue, with coal in thermal power plants. This policy mandates a 5-7 percent co-firing rate, depending on technical feasibility, as a measure to reduce carbon emissions and utilize biomass efficiently.
India’s strategy to expand its thermal power capacity while simultaneously boosting its renewable energy footprint is a balanced approach to meet future energy demands sustainably. The planned investment in coal-based capacity, along with robust policies to encourage renewable energy, highlights India’s commitment to energy security and environmental sustainability.
