India’s Energy Paradox: Hydropower Falls, Coal Rises

India’s power sector is caught in a significant paradox: a rapid expansion of renewable energy capacity runs parallel with an unwavering dependence on coal. This dynamic is largely driven by a notable decline in hydropower generation, which traditionally offered a flexible power source.

In July, renewable sources impressively supplied a record one-fifth of India’s power. Despite this, thermal energy, primarily coal, still constituted over 65% of the 182.52 billion units generated during the same month, highlighting the sector’s foundational reliance.

Key Energy Figures

• Hydropower generation saw a substantial 10.75% year-on-year decrease in the first quarter of FY27.
• Reservoir levels hit their lowest point since 2023 due directly to unpredictable weather patterns.
• Coal provided nearly 79% of India’s total domestic energy in FY25.
• Coal production increased by 4.98% in FY25.
• Coal-fired power generation reached a near-three-year high in June 2026.

Coal remains indispensable for India’s energy security, with its production increasing to meet escalating demand. June 2026 saw coal-fired power generation peak, a direct consequence of an extended heatwave driving heightened cooling demand and insufficient monsoon rainfall.

Policy Shifts Amidst Climate Realities

To better integrate renewable energy, India introduced a ‘flexible coal’ policy in January 2023. This initiative mandated power plants to operate at a minimum technical load of 40%, aiming to create an additional 18GW to 34 GW of renewable energy space and potentially reduce power sector emissions by up to 8.37%.

However, this strategic policy was subsequently postponed due to severe El Niño conditions. These weather anomalies led to a surge in power consumption, which in turn necessitated an increased reliance on coal power to meet the immediate energy requirements.

Hydropower’s Vulnerability

Hydropower, historically crucial for meeting peak hour demand, proves highly susceptible to weather dependencies. The El Niño conditions in May 2026 exacerbated this vulnerability, leading to record peak demands.

• All-India peak demand reached 270.8 GW during solar hours.
• Non-solar hours saw a peak demand of 253.3 GW.
• Hydropower generation was further curtailed by 10.75% compared to the corresponding period in 2025.
• Flash floods in the Teesta river basin since October 2023 have also caused significant operational disruptions.

Despite India’s ambitious commitment to achieving net-zero emissions by 2070, announced at the COP26 Summit, and its ranking as the third globally in renewable energy installed capacity (283.46 GW by April), the persistent dependence on coal poses a substantial challenge to its 2030 clean energy targets. While installed capacity goals are likely to be met, the actual phasing down of coal power generation remains a significant hurdle for the nation’s energy transition.