Indian states approve 18.2 GW of new thermal capacity, sparking trillion-rupee investment surge

State distribution utilities have signed agreements for 18.2 GW of new coal-based generation, reviving a market that was largely dormant for several years. The capital needed for these projects is projected at about ₹2.3-2.4 trillion, with unit costs of roughly ₹13-14 crore per megawatt. If one outlet investment rate continues toward the government's goal of 80 GW of additional coal capacity by the early 2030s, total funding requirements could reach approximately ₹10.8 trillion, a rise of more than 60 percent over earlier forecasts.

The resurgence is attributed to the limitations of solar and wind, which supply power only during daylight, creating a baseload shortfall. State electricity authorities have highlighted growing demand-supply imbalances as justification for returning to coal. Policy changes, such as attaching guaranteed coal supply to each tender and shifting project structures to design-build-finance-own-operate models, are reducing risk for developers.