Presently, the thermal based power plants caters majority of the demand of power in developing countries like India. Development of an electricity allocation model will help in the proper allocation of the energy sources in meeting the future electricity demand in such countries. In this paper, an energy planning model has been developed that minimizes the cost of power generation and determines the optimum allocation of different energy sources for the centralized and decentralized power generation in India with special emphasis on cost factor for the coal power plants. The electricity distribution pattern is obtained for the year 2020. The results indicate that the electricity generation mix would be 15,800 GWh (4 ) from the coal based plants. The OEAM model is validated by the sensitivity analysis. This study can be used by the policy makers for framing energy policies in developing countries. © 2006-2016 Asian Research Publishing Network (ARPN). All rights reserved.