India’s coal based electricity system is at a turning point: Falling renewable energy prices have made them economically competitive to coal, stimulating a surge in low-carbon investments. At the same time, roughly 100 GW of new coal investments are planned until 2027. Economic factors are insufficient for explaining these contradictory strategies. Understanding the political economy coal investments is therefore key to develop strategies that foster a low carbon energy transition. In this paper, we analyze findings from 28 semi-structured interviews with experts, international donors, civil society and policymakers in the Indian power sector. We find that, increasing electricity consumption, meet future demand growth and cheap electricity are major policy objectives that led to past and current investments in coal-based electricity generation. However, recent developments in solar modules prices coupled with favorable political shifts can explain the increasing salience of low-carbon investments. Concentrated energy related jobs and local economic growth are important determinants of current coal investments and potential long-term barriers to a clean energy transition. By identifying political economy determinants of coal investments, our analysis provides possible entry points for feasible climate mitigation policies.
