If Energy Storage Comes at Scale, Can Flexi Coal be Left Behind?

Imagine a multi-way tug of war and the country’s electricity grid sitting in the middle of it. On one end is the rapid acceleration of renewable energy capacity and on the other end is a slowly crumbling, but strong foundation of thermal power. Add to it the complexity of lack of balancing energy sources. And then there is rising power demand led by cooling demand, new energy guzzling sectors such as data centres and modern electrification. There is also an emerging pull factor of decentralised energy solutions.

India is now thinking to make its coal fleet flexible so that it can move in sync with renewable energy. This is believed to unburden the grid and provide electricity supply with enough resilience and foresight. But at what cost? And more importantly, would it work?

 What is flexi-coal and how does it compare with energy storage?

Since 2019, the federal government has initiated discussion on flexible operation of coal-based thermal power plants. The idea is mooted in the need to integrate renewable energy and ensure grid stability. According to the initial plan, all coal power plants would run at 55% minimum technical load (MTL) with a gradual transition to 40% over time to enable greater system flexibility.

Flexibility in coal plants is primarily defined by two parameters: minimum technical load (MTL) and ramp rate, which together determine how effectively they can respond to system variability. For instance, in April 2026, the thermal fleet reduced output to around 120 GW during peak solar hours and ramped back up to nearly 180 GW in the evening, a daily ramp of about 60 GW.

However, the rapid growth of RE has created a clear need to lower MTLs. For instance, between July and December 2025, the system witnessed around 2.3 TWh of flexibility-related curtailment- indicating that this additional solar generation could have been absorbed by the grid if all coal plants ‘had’ operated more flexibly. 

The 40% MTL mandate under the flexible coal framework was initially planned for rollout this year, but has been deferred by a year. Two main reasons for it are lack of clarity over compensation mechanisms and the need for retrofits in older units.

While compensation is defined, and relatively generous, for inter-state (ISGS) plants, many state regulators have yet to notify similar frameworks. This limits cost recovery for intra-state plants. Technology is not a major barrier, but required retrofits would involve capital expenditure which would have to be recovered by tariff approval processes. Therefore, introducing this additional flexibility involves complex regulatory approvals, often requiring multiple buy-ins and navigating political considerations. This can make the process frustratingly slow.

The compelling case of energy storage

For India to have a flexible power system, it is obvious that its grid cannot solely rely on one technology, and especially not the one dependent on fossil fuel. Power system flexibility refers to the capacity of a power system to manage variability and uncertainty in demand and supply across all relevant timescales. This encompasses both instantaneous system stability and long-term security of supply, while preserving reliability and cost efficiency. Achieving adequate flexibility requires coordinated deployment of multiple resources. These include grid infrastructure, demand-side response mechanisms, advanced forecasting systems for variable renewable energy, energy storage systems (ESS), and flexible operational regimes for thermal power plants.

An analysis of combining solar and storage to meet a significant share of round-the-clock demand (90% and above), akin to Firm and Dispatchable RE (FDRE)-type setups, suggests that such configurations can already deliver lower-cost power on an LCOE basis as compared to present levels of average power purchase cost (APPC) of distribution utilities. This is a modelled scenario and may not fully capture all system costs, but the system is gradually moving in that direction. As the cost of solar and storage continue to decline and integration improves, such configurations are expected to become increasingly viable. 

As flexibility is determined by several factors, including the prevailing generation mix, the degree of ESS penetration, and shifting demand patterns, it is necessary that the grid planning framework is a continuous and adaptive one.

The grid has consistently experienced over-injection due to excess generation, both from solar and coal operating above MTL, leading to high frequency conditions. This requires a solution that can manage both simultaneously. ESS can provide that flexibility. In fact, with tightening deviation norms and stricter penalties, the case for co-located ESS for RE becomes significantly stronger. Coal operators are also increasingly viewing ESS as a near-term solution, ahead of undertaking upgrades to enable operation at 40% MTL and below.

It’s a tortoise and hare race

There is a prevalent sentiment that coal flexibility could be achieved easily, and at much faster pace than installing ESS. But it is far more complex than earlier thought of. There are hardly any pilot projects in India. The original equipment manufacturers (OEMs) in the thermal power sector are ill-equipped in providing retrofitting equipment required for flexible operations. This would invariably lead to import dependence. Even if the thermal power plants do retrofit and run at 40% MTL, they would incur significant expenditure at all levels of operations. It would also need to factor in the reduced life span due to the reduced load operations, according to the results of the pilot project conducted by NTPC Limited.  

And for this, there is no clear compensation mechanism yet, as is being complained by the private sector. Section 62 projects (mostly NTPC) have a defined cost recovery mechanism (except increase in O&M cost) under the CERC Tariff Regulation. The private sector, however, has contested that Section 63 projects (under which power projects are awarded to private companies) do not have any provision to recover these mandatory investments. These private players have petitioned to the government that a regulatory framework to design and compute the compensation framework for Section 63 projects would need to be built. 

In either case, all these additional costs would be passed on to the end customer for whom the electricity cost would go up.

Flexibilising coal is not just a technical challenge—it is an economic one. Operating plants at lower load factors raises heat rates and reduces efficiency, while additional capex is often required for retrofits to enable flexible operations. Together, this pushes up the per-unit cost of coal power. At the same time, lower utilisation spreads fixed costs over fewer units of generation, significantly increasing the fixed cost burden that is ultimately borne by DISCOMs. In effect, the risk of underutilisation is transferred downstream.

Meanwhile, worldwide, the installation of ESS is rising at a rapid pace and the cost is falling. Battery manufacturers are ramping up their production capacity to meet the rising demand. In India, RE players are investing in the ESS ecosystem and building in storage in the generation projects. About 12.5 GW of ESS projects, including BESS and PSP, are expected to get connected to the national grid by FY2026-27.

Given the operational and technical complexities associated with coal flexibility, accelerating energy storage deployment offers a more immediate and scalable solution for grid balancing. India has already made significant progress on both battery energy storage systems (BESS) and pumped storage projects (PSP), with around 12 GW of ESS capacity currently linked to RE pooling stations. Additional capacity is also emerging outside pooling stations and within intra-state systems. However, with solar capacity expanding rapidly, the pace of ESS deployment must increase further to meet the growing need for flexibility and ensure reliable integration of RE into the grid. 

Duttatreya Das is Energy Analyst (Asia) at Ember and Shreya Jai is Energy Lead at Climate Trends. Views expressed are personal.