Renewables edge out coal as world’s biggest source of electricity: Many positives, some concerns

When the Paris Agreement was signed in 2015, India had committed to achieving 40 per cent non-fossil fuel capacity by 2030, a target hiked to 50 per cent in 2022. The new Ember report, which analysed changes in global electricity generation from January to June 2025 compared with the same period last year, said that while coal fell in both China and India, the dip in India was deemed as “temporary” while it was cited as “more structural” in China.

Globally, while electricity demand is growing around the world, the growth in solar and wind was so robust that it met 100 per cent of the extra electricity demand, even helping drive a slight decline in coal and gas use. The report also had a deeper analysis of the top four carbon dioxide-emitting economies — China, the US, India and the EU — that together account for 63 per cent of the world’s electricity generation and 64 per cent of global CO2 emissions from the power sector.

A separate report by the Paris-based International Energy Agency (IEA) noted that global renewables could more than double by the end of the decade, with 80 per cent of new clean energy capacity expected to come from solar power.

The IEA said China would remain the world’s biggest growth market for renewables, with India emerging as the second largest over the decade. Fatih Birol, the IEA’s executive director, said: “The growth in global renewable capacity in the coming years will be dominated by solar PV – but with wind, hydropower, bioenergy and geothermal all contributing, too.”

Three broad takeaways from the Ember report:

Solar and wind outpaced demand growth in the first half of 2025: Global electricity demand grew by 2.6 per cent overall in the first half of 2025, with this increase more than met by increases in solar (31 per cent) and wind (7.7 per cent) generation.

Hydro fell significantly while bioenergy output dipped slightly, and nuclear rose modestly, while overall fossil generation fell marginally.

Solar’s growth effectively increased the share of solar power in the global electricity mix from 6.9 per cent to 8.8 per cent. China accounted for 55 per cent of global solar generation growth, followed by the US (14 per cent), the EU (12 per cent), India (5.6 per cent) and Brazil (3.2 per cent), while the rest of the world contributed just 9 per cent.

Coal dips in China and India — temporarily in India, but more structurally in China: As the strong rise in solar led to renewables overtaking coal generation for the first time on record in the first half of 2025, renewable’s share of global electricity rose to 34.3 per cent while coal’s share fell to 33.1 per cent.

Among major economies, fossil fuel generation decreased in China and India, where clean generation outpaced demand growth, while in the US, clean sources did not keep pace with demand rise, so fossil generation increased, the study said. In the EU, both coal and gas inched up to offset lower wind, hydro and bioenergy output.

Power sector emissions plateaued: Despite global electricity demand rising, emissions fell slightly in the first half of 2025. Declines in China and India reflected clean generation growth outpacing demand, while emissions increased in the EU and the US compared with the same period last year.

India’s renewables surge, the resultant problems

As of June 2025, India’s total installed capacity stood at 485 gigawatts (GW), of which renewables – including solar, wind, small hydro, and biogas – accounted for 185 GW, according to the Ministry of New and Renewable Energy. Large hydro contributed 49 GW, and nuclear 9 GW, taking the total non-fossil fuel capacity just over the halfway mark. Thermal power, mostly coal- and gas-based, made up the remaining 242 GW, or 49.9 per cent. In 2015, thermal’s share was 70 per cent.

India’s energy status overview

With the surge in green power, carbon dioxide emissions from India’s electricity sector in the first half of this year too have shown a marginal decline from the same period last year, a new analysis has revealed.

This break from the trend was the first time India’s CO2 emissions from the power sector showed a dip and was partly on account of better weather conditions dampening demand, according to data from the UK-based Centre for Research on Energy and Clean Air. More than half of India’s CO2 output comes from coal used for electricity and heat generation, making this sector the most important by far for the country’s emissions.

This renewables surge is coming at a cost, as grid managers are finding out. India’s focus on rapid expansion of renewables in the absence of energy storage systems, especially over the last decade, is now resulting in increasing instability in the country’s electricity grid. The issue is compounded by the scaling down of thermal expansion, which provides critical baseload support to the grid during evenings in summer months, when solar generation dips and demand remains high.

Add to that the continuing mess in the distribution side of the electricity supply business, almost entirely on account of the unwillingness among states to plug the revenue leak on the downstream retail end of the electricity sector. This is further compounded by the regular bankrolling of discom (distribution companies) losses by two central lending utilities, government officials involved in the exercise said.

The Indian government has begun moving proactively on the policy front in recent months, with a push for energy storage and a policy pivot back towards thermal, and nuclear, especially the small modular reactors segment.

In February, the Central Electricity Authority (CEA) issued an advisory to co-locate energy storage systems with solar projects in future tenders to ensure grid stability. The Ministry of Power has also expanded its viability gap funding (VGF) scheme for battery storage, adding 30 gigawatt-hours (GWh) to the 13 GWh already under implementation, with a total outlay of Rs 5,400 crore. On the pumped hydro front, 51 GW is expected to come online by 2032. The inter-state transmission system (ISTS) waiver for storage projects has also been extended until June 2028.