The recent rise in global energy prices following the escalation of the conflict in West Asia has once again exposed India’s continuing vulnerability to external energy shocks. Despite years of policy emphasis on renewable energy, nearly half of India’s fossil fuel imports still transit through the Strait of Hormuz, including crude shipments from Saudi Arabia and Liquefied Natural Gas (LNG) imports from Qatar.

This vulnerability sits uneasily alongside the dominant narrative around India’s clean energy transition. Over the past decade, India has emerged as one of the world’s fastest-growing renewable energy markets. Since 2017, renewables have consistently accounted for the largest share of new power capacity additions in the country. In numbers, renewable energy sources accounted for 42.4% of India’s installed power capacity by March 2026, up dramatically from just 0.72% in March 2005. Over the same period, coal’s share in installed capacity fell from 58.7% to 42.2%.

By conventional metrics, India appears well into an energy transition. Yet, the persistence of energy price shocks reveals a more complicated reality. Installed capacity is not the same as actual electricity generation. While renewables now account for over two-fifths of installed capacity, they generated only 15.8% of electricity in April 2026. Coal, by contrast, still accounted for 71.8% of electricity generation, only marginally lower than its 76.2% share in March 2019.

Capacity and generation gap

This gap between capacity and generation is central to understanding India’s energy system. The country has succeeded in building renewable infrastructure, but not yet in replacing coal in the actual electricity mix. In effect, renewable energy is being added on top of coal rather than displacing it. The data clearly show India’s continued dependence on coal. Despite strong renewable growth since 2017, India has added almost no new fossil fuel capacity since 2018, retired very few old coal plants, and seen gas-based capacity decline. As a result, coal remains the main backup and balancing source in the power system.

The reasons are structural. Solar and wind power remain intermittent sources of electricity. Their output fluctuates with weather conditions and the time of day, while electricity demand remains continuous. In the absence of large-scale battery storage, flexible grids and adequate balancing capacity, coal continues to provide the baseload reliability required to keep the system functioning.

This also explains why domestic electricity prices remain closely tied to global fossil fuel markets. Historical trends show Indian electricity prices moving alongside Brent crude in the last few years. Even sectors that appear domestically anchored remain indirectly exposed to external commodity cycles because fossil fuels continue to determine marginal cost of power.

Ground reality

As a result, current geopolitical tensions in West Asia affect India more severely. A spike in crude prices not only raises transportation and industrial costs directly, but also pushes up coal prices, electricity tariffs, inflation, and fiscal pressures.

India’s energy transition discourse is increasingly centred around the wrong benchmark. The focus remains on installed renewable capacity because it offers an attractive measure of progress. Yet, power systems are not sustained by headline capacity additions. They depend on actual electricity generation and the ability to supply power consistently when it is needed most.

The distinction matters because it shapes perceptions of vulnerability. China remains less exposed, with oil and gas accounting for only 4% of its power mix and electric vehicles and hybrids, now over half of new car sales, reducing oil demand by over a million barrels a day. Spain shows the alternative, having broken the gas-electricity link through renewables. India’s transition is real, but incomplete.

Work towards system transformation

This does not diminish the importance of the renewable push. On the contrary, India’s decision to aggressively scale solar and wind capacity since the late 2010s now appears prescient given growing geopolitical instability and fossil fuel volatility. But the next phase of transition will require moving beyond capacity creation towards system transformation itself.

That means investing in storage infrastructure, grid modernisation, transmission connectivity and market mechanisms capable of integrating intermittent renewables at scale. It also requires recognising that coal’s persistence is not simply a policy failure or institutional inertia. Coal currently performs a stabilising function within the grid that renewable energy, in its present form, cannot yet fully replicate.

India’s energy challenge today is therefore not merely about producing more green power. It is about building an electricity system in which renewables can reliably substitute for fossil fuels in actual generation. Until that happens, every geopolitical crisis and every spike in global energy prices will continue to remind India that its green transition still runs on coal.

Aashi Gupta is an Associate Fellow at the Centre for Social and Economic Progress, New Delhi. Naveen Kumar is an Associate Fellow at the Centre for Social and Economic Progress, New Delhi. The views expressed are personal