Context

• The recent rise in global energy prices due to escalating conflict in West Asia has highlighted India’s continuing vulnerability to external energy shocks.
• Despite major investments in renewable energy, nearly half of India’s fossil fuel imports still pass through the Strait of Hormuz, including crude oil from Saudi Arabia and Liquefied Natural Gas (LNG) from Qatar.
• Although India is often recognised as a global leader in the clean energy transition, the country’s electricity system remains heavily dependent on coal.

Growth of Renewable Energy in India

• Expansion of Installed Capacity
  • Since 2017, renewables have contributed the largest share of new power capacity additions.
  • By March 2026, renewable sources accounted for 42.4% of installed power capacity, compared to only 0.72% in 2005.
  • During the same period, coal’s share in installed capacity declined from 58.7% to 42.2%.
  • The rapid expansion of solar energy and wind energy demonstrates India’s commitment to reducing dependence on fossil fuels and achieving long-term energy sustainability.
• Installed Capacity vs Actual Generation
  • Despite impressive capacity growth, renewable energy contributes far less to actual electricity generation.
  • In April 2026, renewables generated only 15.8% of electricity, while coal still accounted for 71.8% of power generation.
  • This gap between installed capacity and actual generation is central to understanding India’s energy system.
  • Renewable energy is being added alongside coal rather than replacing it. As a result, coal continues to dominate India’s electricity supply.

Structural Challenges in India’s Power System

• Intermittent Nature of Renewables
  • The output of solar and wind power depends on weather conditions and time of day, whereas electricity demand remains continuous.
  • In the absence of large-scale battery storage, flexible grids, and efficient balancing systems, renewable sources cannot provide uninterrupted electricity supply.
  • Consequently, coal plants continue to perform the crucial role of ensuring baseload reliability within the power system.
• Continued Dependence on Coal
  • India has added very little new fossil fuel capacity since 2018, but it has also retired very few old coal plants.
  • Gas-based capacity has even declined over time. This has strengthened coal’s position as the primary backup and balancing source in the electricity sector.
  • Coal’s persistence is therefore not merely a policy failure; it reflects the present technological and infrastructural limitations of renewable integration.

Impact of Global Energy Shocks

• Link Between Global Markets and Domestic Prices
  • India’s electricity prices remain closely connected to international fossil fuel markets.
  • Historical trends show domestic electricity tariffs moving alongside Brent crude prices because fossil fuels continue to determine the marginal cost of power generation.
  • As a result, geopolitical instability in West Asia directly affects India’s economy.
  • Rising crude oil prices increase transportation costs, industrial expenses, coal prices, electricity tariffs, inflation, and fiscal pressure.
• India’s Vulnerability Compared to Other Countries
  • Countries such as China and Spain illustrate alternative pathways.
  • China has reduced vulnerability by limiting oil and gas to a small share of its electricity mix and rapidly expanding electric vehicles and hybrid technologies.
  • Spain has weakened the connection between gas prices and electricity prices through extensive renewable integration.
  • India, however, remains vulnerable because its renewable transition has not yet fundamentally transformed electricity generation.

Need for System Transformation

• Beyond Capacity Expansion
  • India’s renewable push remains an important and forward-looking achievement, especially in a period of rising geopolitical uncertainty and fossil fuel volatility.
  • However, the next stage of transition requires deeper system transformation rather than capacity expansion alone.
  • This transformation demands investment in:
    • Storage infrastructure
    • Grid modernisation
    • Improved transmission connectivity
    • Better market mechanisms for renewable integration
  • Without these reforms, renewable energy cannot reliably substitute fossil fuels in actual electricity generation.
• Building a Reliable Green Energy System
  • The ultimate challenge for India is not only producing more green energy but also creating a system where renewables can provide stable and continuous power supply.
  • Until renewable energy achieves this reliability, coal will continue to play a stabilising role in the grid.

Conclusion

• India has made remarkable progress in expanding renewable energy capacity and has emerged as one of the world’s fastest-growing clean energy markets.
• However, the dominance of coal in electricity generation demonstrates that the energy transition remains incomplete.
• The gap between installed renewable capacity and actual electricity generation continues to expose India to global energy shocks, fossil fuel price volatility, and geopolitical instability.
• A successful transition will therefore require not only the expansion of renewable infrastructure but also comprehensive reforms in storage systems, grid management, and electricity markets.