Rajasthan Could Save Rs. 85 Bn by Replacing New Coal With RE-Storage: CEEW

Rajasthan could save up to Rs. 85 billion in power procurement costs in 2030 by meeting its emerging reliability needs through renewable energy (RE) and storage rather than new coal capacity, according to a study by the Council on Energy, Environment and Water (CEEW).

The CEEW study, titled “How Should Indian States Choose New Power Generation Capacity? A Case Study of Rajasthan,” assesses a February 2025 proposal by Rajasthan distribution companies (discoms) to contract 3,200 MW of new coal capacity to address projected shortages.

CEEW finds that Rajasthan’s 2030 shortfall is fundamentally a timing and flexibility problem, not just a capacity problem. Nearly 90% of the projected 5.5-billion-unit deficit occurs during non-solar hours, when solar generation is unavailable, and the system needs resources that can respond swiftly to demand.

Using 15-minute production-cost simulations for 2030, the study compares three pathways — business as usual, adding 3,200 MW of new coal, and an equivalent energy supply from an RE-plus-storage combination of solar, wind, and battery storage — to determine which best meets Rajasthan’s needs at the lowest cost.

Coal Capacity vs. RE-Plus-Storage Combination

The study compares the proposed coal capacity with an equivalent RE-plus-storage combination integrated into the state’s procurement mix and assesses its ability to meet demand at the same reliability level for every 15-minute block throughout 2030.

CEEW recommends that state discoms institutionalise scenario-based integrated resource planning, that procurement frameworks target least-cost outcomes at the system level by allowing all mainstream technologies to compete, and that state regulators build the technical capacity to evaluate procurement proposals independently.

State discoms should conduct robust, scenario-based integrated resource planning (IRP) to assess demand projections and identify an optimal supply mix that meets demand in line with the reliability criteria set by the Central Electricity Authority (CEA).

Bihar & Assam Contract 5.6 GW New Coal in 2025 at Rs. 4.17–4.54/Unit

The Rajasthan case points to a wider planning gap. The CEEW study finds that 3,200 MW of new coal capacity — designed to generate over 20 billion units annually to address a 5.5-billion-unit deficit — would still leave ~1% of demand unmet, falling short of the Central Electricity Authority’s 0.05% reliability benchmark.

Elsewhere, recent state procurements show a similar disconnect: Bihar and Assam contracted 5,600 MW of new coal capacity in 2025 at fixed costs of INR 4.17–4.54 per unit, even though the underlying planning studies assumed capex that implied fixed costs of under INR 2.55 per unit for the same technology.

Disha Agarwal, Fellow, Council on Energy, Environment and Water (CEEW), said, “Discoms should evaluate options based on grid needs and overall system cost, rather than technology-level costs alone. Our analysis shows that RE-plus-storage can meet Rajasthan’s future reliability needs at lower cost than the proposed coal capacity. SECI’s recent round-the-clock RE bid discovered a tariff lower than recently contracted or proposed new coal capacity in several states. Such studies establish the need for planning exercises that states must undertake continuously as technology capabilities and costs change rapidly and demand becomes more uncertain.”

Cost Savings From Replacing New Coal With RE-Plus-Storage in Rajasthan

The CEEW study found that replacing new coal with renewable energy-plus-storage in Rajasthan can generate net savings of Rs. 11.4–85 billion in 2030 and help discoms earn Rs. 35 billion in additional revenue by selling surplus power on the exchanges.

The clean pathway could create ~27,000 full-time-equivalent (FTE) jobs by 2030, compared with 2,560 under new coal, while attracting Rs. 600 billion in clean energy investment. It would also cut the state’s power-sector CO2 emissions by 24%, to 52 million tonnes, compared with 68 million tonnes under new coal. This is relevant given that Rajasthan’s electricity requirement grew at an 8% CAGR between FY22 and FY25, with demand projected to reach 1.5 times FY25 levels by FY30.

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