India: Power plants cut reliance on imported coal as renewable sources gain ground

• Imported coal structurally backed down
• Renewables now dominate marginal dispatch

What happened: Imported coal backed down through 2025

An analysis of Central Electricity Authority (CEA) coal and imported coal statements from January to November 2025 shows a clear and progressive reduction in India’s reliance on imported-coal-based power generation, particularly at large coastal plants such as Mundra. The displacement began after March, deepened through the monsoon months, and remained firmly in place even in November, when electricity demand typically begins to normalise.

Imported coal receipts peaked in March at around 6.5 million tonnes, coinciding with the highest coal burn at Mundra-based plants. Thereafter, receipts declined steadily, reaching a low of about 3.0 million tonnes by November. Over the same period, coal burn at Mundra fell sharply, while domestic coal receipts remained broadly stable and all-India coal stocks rose steadily.

This pattern indicates that imported-coal-based plants were systematically backed down, not constrained by fuel availability.

Why it happened: Renewables moved up the merit order

The primary driver behind the reduction in imported coal usage was the rapid increase in renewable generation, particularly solar during April-September and wind during the monsoon months. As renewable availability rose, incremental electricity demand was increasingly met by low-marginal-cost generation, pushing higher-cost imported-coal-based plants out of the merit order.

Several features in the data reinforce this interpretation:

• Domestic coal receipts remained resilient, indicating no systemic fuel stress
• Total coal burn declined only modestly, while imported coal receipts fell sharply
• Coal stocks increased consistently, rising from about 46 million tonnes in January to over 54 million tonnes by November.

Rising stocks alongside falling imported coal burn strongly suggest economic dispatch decisions, not operational constraints. Imported-coal-based plants, especially at Mundra, effectively served as swing or balancing capacity, ramping down first as renewable output increased.

November signal: Structural, not seasonal

November is particularly instructive. Despite the easing of monsoon conditions and early signs of seasonal demand recovery, imported coal receipts fell further to around 3.0 million tonnes, total coal burn dropped to its lowest level of the year, and coal stocks reached a fresh high.

This confirms that the displacement of imported coal was not merely a monsoon-related phenomenon, but a more durable shift in dispatch economics.

Outlook: Imported coal as residual capacity

Looking ahead, historical patterns suggest that imported coal is likely to remain structurally marginal in India’s power mix. As renewable capacity continues to expand and domestic coal availability remains adequate, imported-coal-based plants are expected to operate primarily as load-following or contingency capacity, rather than baseload generation.

Short-term rebounds in imported coal usage may occur during periods of peak demand or renewable intermittency. However, the broader trend points to renewables displacing imported coal first, reinforcing a lasting realignment in India’s power-sector merit order.