India may save $66 billion by phasing out thermal coal imports by 2029

Boosting renewable energy capacity could help India eliminate thermal coal imports and save $66 billion between 2025 and 2029

India could discontinue its thermal coal imports by 2029 and save approximately $66 billion in foreign exchange between 2025 and 2029, if the country could add 50 gigawatts of renewable energy capacity annually, according to a report released on Monday by the think tank Climate Risks Horizon. 

Renewable energy expansion could help in saving around $173 billion from 2025–2034, easing the strain on India’s energy sector and foreign exchange reserves caused by coal imports, the report said. 

 

Dependence on coal imports

India’s electricity sector remains heavily reliant on thermal coal imports. In the financial year 2023-24, India imported 206 million tonnes of thermal coal, accounting for around 20 per cent of its total coal needs, at a cost of $21 billion. In the last decade, thermal coal imports rose by 58 per cent, with the total value of these imports rising by 124 per cent due to fluctuating global prices and the weakening of the Indian rupee.

 

Rise in coal demand in India

The Climate Risks Horizon report mentions coal imports tend to peak during the summer months when the demand for cooling drives up electricity consumption. From 2013 to 2023, India imported approximately 2,128 million tonnes of coal, with an annual growth rate of 3.7 per cent. Since 2013, the share of thermal coal in total imports has increased by 40 per cent, posing both physical and financial risks to the nation. 

Physical risks include the potential disruption of coal supplies due to political upheavals or natural disasters. Meanwhile, the volatility in global energy prices increases financial uncertainty, affecting both power companies and consumers dependent on imported coal.

 

Energy demand and climate impact

India’s energy demand is expected to grow further due to urbanisation, industrial expansion, and the increasing adoption of electric technologies. The report points out that per capita electricity consumption rose from 957 kilowatt-hours (kWh) in 2013 to 1,331 kWh in 2022. Additionally, heatwaves aggravated by climate change have led to even higher power consumption, further intensifying the demand for energy.

 

India’s renewable energy goals

A focused and aggressive renewable energy expansion strategy could help reduce the country’s dependence on imported coal. In 2023-24, India updated its renewable energy targets, aiming for 500 gigawatts of non-fossil fuel energy capacity by 2030. To achieve this ambitious target, the government plans to add 50 gigawatts of renewable energy annually until 2027-28.   

 

  Currently, India’s renewable energy capacity stands at approximately 151 gigawatts from solar and wind energy, with the total increasing to around 200 gigawatts when considering hydro, small-hydro, and biogas sources. The highest addition of renewable energy to date occurred in 2024-25, when India added 24 gigawatts in a single year.

 

Renewables rise, coal holds strong

India’s per capita coal consumption remains significant, as coal continues to be the backbone of the country's energy supply. In 2023, coal contributed nearly 79 per cent of the country’s total energy supply, with the electricity sector using 69 per cent of it. Although India’s per capita primary energy consumption was 27.3 gigajoules — lower than in developed regions — coal demand continues to grow due to rising population and energy needs. 

India’s renewable energy capacity rose by 24.2 GW (13.5 per cent) over the year, reaching 203.18 GW in October 2024. Renewables now account for over 46.3 per cent of the nation's 452.69 GW installed capacity.

 

[With PTI inputs]