India May Need to Increase Its Coal Power Capacity Additions

India’s electricity demand is growing so fast that planned capacity additions may fall short, forcing the country to add more coal-fired power capacity. Last year, India planned to add 97 gigawatts of coal power capacity over 10 years to reach 307 gigawatts by 2035. It currently has about 230 gigawatts of coal capacity. Adjusted additions needed beyond last year’s target for coal capacity are estimated at 105 to 150 gigawatts—more than double the current estimate, according to Ghanshyam Prasad, chairperson of the Central Electricity Authority (CEA). The coal power additions are in addition to India’s aggressive renewable energy capacity additions. India realizes that as demand grows, it needs a stable, reliable energy supply, not just intermittent resources with expensive battery storage as backup.

India’s daily peak electricity ​demand this year has been running about 45 to 50 gigawatts higher than a ‌year ⁠ago, putting pressure on coal supplies and limiting opportunities for scheduled maintenance of thermal power plants. Weaker monsoon rains reduced hydroelectric output and increased reliance on the country’s thermal plants. India’s power shortages surged to 560 million kilowatt-hours in September, the highest since August 2023, even as coal-fired plants increased output ​to meet the strong demand. Coal-fired ​generation increased 13.3% ⁠in September from a year earlier, while hydropower generation fell 20% from a year ago. The increase in coal-based generation has also contributed to falling fuel inventories. Coal stocks at domestic coal-based power plants fell about 66% by the end of September, compared with a 23% decline in the same period last year.

The renewed emphasis on coal capacity marks a shift from India’s National Electricity Plan of 2018, which said no additional coal-based capacity would be needed beyond already planned projects.

India’s focus on coal does not come at the cost of its renewable energy expansion. The country added about 50 gigawatts of renewable capacity last year and is expected to continue adding more than 50 gigawatts annually. However, India faces challenges integrating large volumes of renewable energy into the grid. In Rajasthan and Gujarat, for example, the concentration of renewable projects has led to grid trippings involving the automatic disconnection of generation units or transmission lines under abnormal operating conditions. But India is ensuring that its renewable growth is complemented by other sources, with nuclear power and pumped-storage hydropower also contributing to the energy mix to maintain grid stability and ensure reliable electricity supplies as demand keeps rising.

India’s AI Boom Push Data Center Development

The artificial intelligence boom has also hit India, fueling a data-center building spree. For example, Amazon plans a $21 billion investment in AI infrastructure in India by 2030. Microsoft has also announced a four-year $20.5 billion investment plan for India, mostly earmarked for AI data centers. Google is also spending billions on facilities that advance Prime Minister Narendra Modi’s goal to host “the whole world’s data,” stretching from Maharashtra in the west to Andhra Pradesh in the south. Unable to match frontier models from the United States and China, India is betting that dominance in AI’s physical backbone may prove just as valuable.

But resistance to data center development is growing in India, as it has in the United States and Europe, where residents have rebelled against the spread of AI data centers, complaining of noise, surging electricity consumption, water stress, and the industrialization of residential neighborhoods. India holds 4% of the world’s freshwater for 18% of its people, and data centers are clustering in cities already short of it. S&P Global estimates 60% to 80% of Indian data centers could face high water stress this decade. In 2025, data centers used about 150 billion liters of water, a figure projected to more than double by 2030. According to Amazon, however, its project near Mumbai will not burden public utilities because it will use dedicated water and power sources. Its data center will use water-free cooling, a dedicated power supply separate from homes, and noise-mitigation measures. Companies and governments are increasingly turning towards less intrusive methods for AI data center deployments.

In the southern state of Andhra Pradesh, environmentalists oppose Google’s $15 billion data center project, citing risks to wildlife, water, and power supplies, and alleging that a temple’s land was used without permission. Google and the state deny any wrongdoing. Modi’s government has mounted a public defense of data centers, promoting them online as “the invisible engines powering India’s digital life” and ​arguing modern technologies use water and electricity more efficiently.

Conclusion

India may need to add 105 to 150 gigawatts of coal-based power capacity by 2035, exceeding the 97 gigawatts currently planned, to meet rising electricity demand and ensure grid stability. India realizes it needs adequate coal-based baseload capacity to balance fluctuations in renewable power generation it continues to add and to address limited, expensive energy storage availability. AI may be driving the country’s energy growth, as Prime Minister Modi aims to “invite the whole world’s data to reside in India,” providing the backbone for the AI industry. Amazon, Microsoft, and Google are investing in data centers in the country, but face resistance from residents, who worry the centers will demand too much water and electricity, despite the companies’ insistence that they will not burden public utilities because water and power will come from dedicated sources.

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