Solar photovoltaics and Thermal coal

Solar and coal compete to supply the same grids: solar met 75% of world demand growth in 2025 while coal output fell, and in India cheap solar now takes coal's daytime hours while coal is kept for evenings, so solar's growth squeezes how much each coal plant runs.

Solar photovoltaics (energy) and Thermal coal (energy): 4 relationships.

How they are linked

1. Competing for new demand

Substitution · Rising · Solar takes demand growth that coal used to supply

Both sell bulk electricity into the same grids; when solar output grows faster than demand, coal plants are dispatched less because solar has no fuel cost.

75% of the rise in world electricity demand met by solar, 2025
-0.6% change in world coal power output, 2025
33.8% vs 33.0% renewables and coal shares of world electricity, 2025

Solar output rose by a record 636 TWh in 2025 while coal power fell 63 TWh, and renewables overtook coal as the largest source. In India fossil generation fell 52 TWh, about 3.3%, and CREA puts the fall in coal power at about 3% (1,322 to 1,283 TWh), but finds milder weather explains about 36% of the fall in fossil generation, so solar was not the only cause.

Sources: Ember; Centre for Research on Energy and Clean Air (CREA)

2. Where new capacity goes

Transition · High in India · India's capacity additions shift from coal to solar

India now adds far more solar than coal each year, but keeps building coal plants for evening peaks and periods of low sun and wind.

about 44.6 GW solar added in India, FY2025-26
about 39.6 GW thermal capacity under construction, early 2026
97 GW more coal and lignite capacity targeted by FY2034-35

Solar made up just over 88% of renewable additions from April 2025 to January 2026, while installed coal capacity stood at about 221 GW. The two fleets therefore grow side by side, and the contest moves from capacity to how many hours each one runs.

Sources: JMK Research; S&P Global Commodity Insights

3. Tariff gap

Cost and price · Strong · Cheap solar and storage undercut new coal

Solar has no fuel cost and can be contracted at a fixed tariff, while a new coal plant must recover its capital and pay for fuel whose price moves.

₹2.70 per kWh fixed solar tariff in Adani's 6,600 MW Maharashtra contract, 2024
₹5.4 to 5.8 per kWh TERI estimate of the cost of new thermal power, 2025
₹3.9 to 4.9 per kWh TERI estimate for solar plus storage serving a Delhi utility

Plain solar is cheapest only by day; batteries close the gap for evening supply, and a 2024 SECI solar-plus-storage auction cleared as low as ₹3.41 per kWh. The Maharashtra contract shows the pairing in practice: 5,000 MW of solar at a fixed ₹2.70 alongside 1,600 MW of coal power priced on a coal index.

Sources: TaiyangNews; ThePrint; PV Tech

4. Coal backs up solar hours

Transition · High in India · Coal ramps up when the sun sets

Solar output peaks at midday and stops at night, so India's coal fleet is turned down at midday and run hard for the evening peak, which lowers its average use.

69% coal plant load factor, FY2024-25
55% Ember projection of coal plant load factor, FY2031-32
up to 60 GW solar output possible in solar hours, India, 2025

Ember projects that adding the 80 GW of thermal capacity planned by 2032 alongside fast solar growth would push coal plant load factor down to about 55%, spreading fixed costs over fewer units. CREA warns that the 36 GW of thermal capacity under construction could take utilisation to record lows.

Sources: Centre for Research on Energy and Clean Air (CREA); Business Today

For investors

Key learnings

Solar now takes most new electricity demand, so growth in coal burn depends on demand outrunning solar, weather and storage.
In India, solar at about ₹2.70 per kWh and solar plus storage at about ₹3.4 to 4.9 undercut new coal at ₹5.4 to 5.8, capping the tariffs new coal projects can win.
A projected fall in coal plant load factor from 69% to about 55% by FY2031-32 weakens the economics of new coal plants and slows coal volume growth.

What to track

Coal and solar generation in India: Shows how fast solar takes coal's running hours (Monthly · CEA and Grid India)
Coal plant load factor: A falling PLF signals stranded-asset risk for new coal (Monthly · CEA)
Solar and solar-plus-storage auction tariffs: Lower tariffs widen solar's cost lead over new coal (Per auction · SECI and state utilities)

For policymakers

Key learnings

India is building both, about 44.6 GW of solar in FY2025-26 and a target of 97 GW more coal and lignite by FY2034-35, so plans must weigh low coal utilisation against evening reliability.
Storage is the swing factor: while solar plus storage stays cheaper than new coal, some planned coal could be deferred without risking supply.
Falling coal running hours affect coal mining, rail freight and state finances tied to coal, not only power companies.

What to track

Storage capacity tendered and commissioned: More storage lets solar serve evening demand (Quarterly · CEA and SECI)
Coal capacity under construction against demand forecasts: Overbuilding signals low utilisation and costly fixed charges (Yearly · CEA)

India

India added a record 44.6 GW of solar in FY2025-26 while about 39.6 GW of thermal capacity was under construction; coal power fell about 3% in 2025, and Ember projects coal plant load factor to slide from 69% to about 55% by FY2031-32.

Sources

Global Electricity Review 2026, Ember (2026)
India installs record 44 GW solar and 6 GW wind capacity in FY2026, JMK Research (2026)
Solar power addition dominates India's generation capacity over April-Jan, S&P Global Commodity Insights (2026)
India Power Sector Review 2025, Centre for Research on Energy and Clean Air (CREA) (2026)
TERI: solar-plus-storage now cheaper than new thermal power, TaiyangNews (2025)
Adani wins bid to supply 6,600 MW of electricity, Rs 4.08/unit tariff beats JSW, Torrent, ThePrint (2024)
Coal plants' PLF to fall to 55% by FY32: report, Business Today (2025)
SECI solar-plus-storage tender awards bids at cost competitive with new coal in India, PV Tech (2024)