Despite the lowest coal prices in Asia in four years, India’s coal power generation dipped in May to the lowest since the Covid lockdowns of 2020, as a lack of heatwaves and soaring renewable energy installations and generation pushed down coal demand in the electricity sector.

To be sure, the share of coal in India’s power output remains above 70%, but at 70.7% in May, it was the lowest in three years, according to data from federal power grid regulator Grid India reviewed by Reuters.

Natural gas-fired generation and its share in the power mix also slumped in May, contributing to the lower fossil fuel powered electricity in the world’s second-biggest coal importer and fourth-largest LNG importer.

At the same time, power generation from renewable energy sources soared to a record high, as did the share of clean energy in the electricity mix.

India’s lower coal power generation in May was attributed to weaker demand growth due to a lack of heatwaves compared to May last year and economic headwinds. While coal faltered, renewables picked up the slack as installations soar to records.

Coal-fired power generation slumped by 9.5% in May from a year earlier—the steepest fall since the Covid lockdowns of June 2020, per Grid India’s data compiled by Reuters.

Natural gas saw an even more dramatic plunge of 46.5% last month—marking the worst drop since October 2022, when natural gas prices hit record highs in the wake of the Russian invasion of Ukraine.

But renewable energy generation jumped by 17.2% to the highest level ever in May 2025, allowing renewables to grab 15.4% of total power output—the largest share on record.

Related: OPEC Oil Production Fell Short of OPEC+ Target in May

Coal, for its part, saw its share down to 70.7% in May, compared to 74% for the same month last year.

Milder weather with no extreme temperatures surely helped India’s greener power generation last month. But surging renewable capacity installations suggest that the country is getting increasingly serious about boosting significantly its clean energy to reduce reliance on fossil fuel imports.  

Still, India isn’t giving up on coal.

Annual installations of new coal-fired power capacity hit 4 gigawatts (GW) in 2024, flat on the five-year high of 2023 and the highest level since 2019, according to official government figures.

India plans to add as much as 90 GW of coal capacity by 2032 as it looks to meet its surging power demand with reliable baseload electricity.

However, the country is also accelerating renewable energy installations.

In the 2024/2025 financial year ended March 31, 2025, India installed a record high 29.52 GW of renewables capacity, hitting 220.10 GW in total, amid booming solar energy installations. Solar additions jumped to 23.83 GW in FY 2024–25, up from 15.03 GW added in the previous year, government data showed.

India also has 169.40 GW of renewable energy projects under construction and 65.06 GW already tendered.

The country targets to achieve 500 GW of non-fossil fuel power capacity by 2030.

Going forward, India is set to see a surge in power demand and renewable energy build-out in the coming years and decades and could assert itself as a clean energy powerhouse if it boosts investments, U.S.-based clean energy think tank Rocky Mountain Institute (RMI) said in a report last month.

“If the finance catches up, India’s transition could save more emissions by midcentury than Europe and North America combined — while charting the way for emerging economies around the world,” the research noted.

Finland-based Centre for Research on Energy and Clean Air (CREA) also noted in a May report India’s enormous potential to chart a path beyond coal with record renewable energy installations.

“India currently has 234 GW of renewable energy capacity in the pipeline, which will further reduce pressure on thermal resources as solar continues to dominate during peak hours,” CREA analysts said.

“India’s power sector stands at a critical juncture, marked by record-high installed capacity and a rapidly evolving energy mix.”

By Tsvetana Paraskova for Oilprice.com

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