Despite a recent alleviation of electricity demand in certain regions due to rainfall, the coal reserves at domestic coal-fired power plants have seen a significant decline, dropping nearly 24% since early September.
This decrease in coal stocks coincides with an abnormal spike in electricity consumption for September, coupled with a greater dependence on coal-generated power as hydropower production has fallen due to insufficient rainfall and the effects of El Niño. On September 10, peak electricity demand reached 269 gigawatts (GW), marking the highest September demand recorded and just 1 GW shy of the peak demand of 270 GW witnessed in May.
As of September 27, the coal inventory at domestic coal power facilities was at 19.2 million tonnes (mt), representing a staggering 64% shortfall compared to the required stock of 53.7 mt. In contrast, coal stocks were recorded at 25.4 mt on September 1, which was already 52.5% below the necessary amount of 53.5 mt.
Year-on-year, coal inventories have plummeted by over 50%. On the same date in the previous year, coal stocks stood at 43.1 mt, indicating a decrease of approximately 55.5% this year.
Additionally, at least 72 out of 168 coal-powered plants in the country are facing critical fuel supply challenges, with coal reserves dipping below 25% of the standard requirements needed to ensure consistent electricity generation.
This troubling scenario prompted the central government to implement emergency measures last week aimed at increasing coal-based power generation. Utilizing Section 11 of the Electricity Act, which grants the government authority to mandate generation in extraordinary situations, the government instructed about 112 captive coal-fired plants to operate at full capacity from October 1 until December 31.
A captive power plant is a dedicated facility built and maintained by an industrial entity or a consortium of factories for their own electricity needs, rather than for public sale.
Previously, such emergency measures had only been applied to imported coal power plants, which, despite having an installed capacity of around 18 GW, are frequently underused due to the higher costs associated with their electricity generation compared to domestic coal sources.
This year’s unexpected demand surge, along with reduced hydropower generation, has further constrained the availability of alternative power sources, increasing the reliance on thermal plants to cover evening demand gaps.
Between September 1 and September 26, coal-based power generation increased by 15.5%, reaching 96,718.83 million units (MU), up from 83,736.47 MU during the same timeframe last year. Since April, coal-based generation for 2026 has totaled 676,633.25 MU, reflecting a 10.7% increase from 611,331.53 MU in the same period of 2025.
Conversely, hydropower output fell by 15.5% to 16,483.18 MU from 19,505.93 MU during the comparable period in 2025.
Ankit Jain, Vice President and Co-Group Head at ICRA Ltd, noted that disruptions caused by the monsoon had adversely impacted domestic coal supply, affecting mining and distribution operations during this timeframe. “While overall mining output was lower, there was a slight increase in coal supply to the power sector. The limited coal availability, due to monsoon conditions and high Plant Load Factor (PLF) at thermal power stations, has put pressure on coal inventories at various plants, leading to critically low stock levels,” he explained. Jain emphasized that this situation prompted the government to invoke Section 11 to maintain power supply reliability.
Alekhya Dutta, Director of the Electricity and Renewables Division at TERI, stated that the invocation of Section 11 should be viewed as a necessary measure to prevent potential supply shortages and ensure system reliability. “The signs indicate a tighter supply scenario that necessitates proactive management of available thermal resources. With peak demand remaining high at around 270 GW and coal inventories under strain at several plants, extending Section 11 to captive facilities offers additional support by bringing more generation capacity into the market during periods of heightened demand and lower renewable generation,” he remarked.
Experts in the power sector anticipate that the pressure on coal-fired plants may alleviate in the coming weeks as rainfall improves across various regions of the country. The India Meteorological Department has predicted heavy rainfall in several areas soon, which could help reduce cooling demand. However, excessive rainfall may still impede mining and coal transport in certain locations.
