The recent unofficial warning by the Indian Government’s Ministry of Power that no company should start building new coal plants in the next three years is just one of many recent signals that coal’s claim on India’s future is weakening.

The Ministry of Power has concluded slowing demand growth means India doesn’t need any additional power plants over the next three years beyond those already under construction, or renewable projects which the government is committed to.

“This clearly signals that any thermal power plant that is yet to begin construction should back off,” an anonymous ministry official told the Economic Times.

In a further development the Indian government acknowledged that its ‘Ultra Mega Power Plant’ programme was going nowhere, with state governments showing no interest in four massive 4000 megawatt (MW) power plants in Chhattisgarh, Karnataka, Maharashtra and Odisha. As a result, it has officially scrapped the special purpose companies created to develop the projects.

The cancellation of 16,000 MW of proposed coal plants is consistent with the repeated statement of Indian Power Minister, Piyush Goyal, that solar power is now cheaper than coal power based on imported coal.

Goyal has also insisted – to the increasing exasperation of the export coal industry – that India aims to end thermal coal imports within a few years.

Even so, the Indian Government is still committed to the commissioning of coal power plants under construction based on domestic coal, with potentially devastating consequences on agricultural land, air quality and water.

Data gathered by Greenpeace India also shows that the Ministry of Environment Forests and Climate Change has issued permits for at least 17,000 MW of new coal since 2014 and allowed another 33,000 MW to start the permitting process. (In comparison, the entire Australian grid has a capacity of just over 50,000 MW.)

While the Global Coal Plant Tracker estimates over 75,000 MW of coal plants are currently under construction in India, the days of new coal plant proposals may be numbered, if not because of action by the Indian government, then because of pure economics.

Each reduction in estimated future electricity demand and delay in the construction of new coal plants – which are increasing in cost to build and run and near impossible to finance – tilts future power generation towards renewables as the new default power supply option.

There are increasingly powerful domestic drivers against more coal plants too.

Air pollution and water stress start to bite

While the Indian Secretary for coal, Anil Swarup, recently boasted of the unexpected coal surplus as a positive, the government is struggling to address the dramatically-worsening air pollution crisis.

A recent analysis of satellite data by Greenpeace India revealed the coal plant building boom between 2009 and 2015 had resulted in a 13 per cent increase in the levels of PM2.5 fine particle pollution. During the same period sulphur dioxide (SO2) pollution had grown by just under one-third.

The satellite data also revealed major coal power station clusters correlated with high SO2 and nitrogen oxides (NOx) pollution levels.

An increase in coal power has caused a deficit of clean air.

As the air pollution crisis has spread from being a devastating problem in the mostly rural power generation clusters to a regional problem affecting heavily-populated cities, the political fallout has become far harder for the government to contain.

If India’s worsening air pollution wasn’t bad enough the brutal summer heatave and drought has rammed home the vulnerability of an over-reliance on both coal and hydro power plants.

Early in India’s summer the already low-water levels in water storages of last year’s weaker than usual monsoon had forced a handful of coal and hydro power stations offline.

Since then the drought has intensified and even more coal plants have been forced offline: some for short periods while water storages replenish, and others for far longer periods. This has cost already struggling coal power companies at least US$350 million in revenue.

As the financial, air pollution and water stresses from the existing fleet of coal plants mount, the likely impacts make it increasingly unlikely that many of the hundreds of proposed new plants will be built or – even if commissioned – run at full capacity.

Another recent Greenpeace India report calculated existing coal plants in the seven worst drought-affected states already consumed enough water for over 250 million people, a figure which would double if all proposed coal plants were built.

One of the Indian power companies at the centre of the storm engulfing private power generators is Adani.

At ground zero, Adani’s struggles to adapt

Adani is a company with seemingly boundless expansion ambitions irrespective of its mountainous debts. It still touts its dream of building the Carmichael coal mine in the Galilee Basin even though the price of export coal has collapsed.

It dreams of importing more coal through its ports in India, even as falling coal imports are hitting the finances of its ports’ subsidiary. It dreams of building more coal power stations in India, even though opposition grows. Its most recent dream – and perhaps the only one with a semblance of viability – is developing solar power plants.

After the Indian Government recently doubled the clean environment tax on imported coal, analysts suggested it would lead to a switch from importing low calorific coal to buying higher grade supplies.

Shortly afterwards Adani Enterprises CEO, Vinay Prakash, told a coal industry conference that the price differential between lower quality coal and higher quality coal would have to be significantly larger “to make economic sense for Indian importers” to import low quality coal. Adani’s proposed Carmichael mine in Australia, it should be noted, would export low-quality coal.

The effect of the clean environment tax and the recent price increases on low-grade coal announced by Coal India will be to increase the cost of domestic coal power and accelerate the fall in coal imports. It will also narrow the price gap between the cost of new solar and wind projects and coal power based on domestic coal.

If the shifts buffeting coal aren’t bad enough, Adani’s plans to expand its domestic coal plants are encountering resistance too.

A few weeks back a Ministry of Environment and Forests (MoEF) advisory committee rejected Adani’s plan to add a further 3000 MW of coal capacity at its existing 4620 MW Mundra plant.

The committee noted the expansion site is close to a sensitive creek and estuary network, reserved forest and nine villages. The Mundra area, the committee noted, is already “under stress” from the existing plant and Tata Power’s 4000 MW Mundra plant. It suggested Adani seek an alternative site.

As Adani’s coal plans have soured the company has sought to expand on its dream of becoming a major player in the solar industry. In the last few weeks it has announced its plan to build a solar power station in Queensland and up to 10,000 MW of solar plants in India.

In many ways Adani is emblematic of Indian energy policy. Hit by the rising costs of coal and with plants affected by water stress, the company is struggling to service debts incurred on ambitious past plans.

Facing opposition to domestic coal plant plans because of their impacts on air, land and water the company is desperately trying to reinvent itself as a solar company before it is swept aside by more adaptable rivals.

Bob Burton is the Hobart-based Editor of CoalWire, a weekly bulletin on global coal industry developments. (You can sign up for it here.) His Twitter feed is here. Ashish Fernandes is Senior Campaigner at Greenpeace. His Twitter feed is here.