India Boosts Domestic Coal Use in Import-Based Power Plants

India is steadily increasing the use of domestic coal in power plants originally designed to run on imported fuel, marking a significant shift in its energy strategy as it seeks to reduce reliance on costly overseas supplies.

The move comes at a time when global coal prices remain volatile and geopolitical tensions continue to disrupt energy supply chains.

By substituting imported coal with locally sourced fuel, India aims to lower power generation costs while strengthening energy security.

Shift Toward Domestic Coal Gains Momentum

According to government and industry sources, more than 50% domestic coal usage is now being targeted across import-based power plants.

So far this year, domestic coal has been used to operate about 5.7 gigawatts (GW) of capacity out of the total 18.7 GW installed at such plants.

Traditionally, these plants were designed to run on higher-grade imported coal due to its specific calorific value and lower ash content. However, rising import bills and supply uncertainties have prompted authorities to explore blending domestic coal, even if it requires technical adjustments and efficiency trade-offs.

Pilot projects and trials are currently underway to test the feasibility of using higher proportions of domestic coal without significantly impacting plant performance.

Early indications suggest that with proper calibration and blending techniques, power producers can manage the transition effectively.

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What It Means for Energy Costs and Imports

This shift could have far-reaching implications for India’s energy economics. Imported coal is significantly more expensive, especially when freight and currency fluctuations are factored in. By increasing domestic coal usage, power producers can reduce generation costs, which may eventually help stabilise electricity tariffs.

For the government, the strategy aligns with a broader push to curb imports and improve the country’s current account balance. India is one of the world’s largest importers of thermal coal, and reducing this dependence has long been a policy priority.

However, the transition is not without challenges. Domestic coal typically has lower energy efficiency and higher ash content, which can impact plant operations and increase maintenance requirements. Power companies may also need to invest in modifications to handle the different fuel characteristics.

Despite these hurdles, the economic and strategic benefits appear to outweigh the drawbacks, especially in a global environment marked by supply disruptions and price volatility.

In the long term, this move signals a more flexible and resilient energy strategy for India—one that balances cost, availability, and security. While renewable energy continues to expand, coal remains a critical part of the country’s power mix, and optimising its use will be key to ensuring reliable and affordable electricity.