Coal stocks at power plants hit three-year low amid demand, transport woes
Coal stock cover at the country’s thermal power plants has nearly halved to nine days currently from 17 days a year ago, the lowest since November 2023, ratings agency Crisil said. The volume of stocks plunged 42 per cent to 29 million tonnes (MT) in August 2026 from 50 MT in the same month last year as coal-based generation rose about 13 per cent amid a spike in power demand.
Crisil said in a report that the stock depletion was concentrated among power plants dependent on domestic coal, highlighting the challenges of “timely inventory replenishment” amid elevated power demand and coal consumption.
The consumption of coal by thermal plants rose 8 per cent year-on-year to 395 MT between April and August, driven by a 9.5 per cent increase in power demand after an abnormally hot summer and a below-normal southwest monsoon.
Cumulative rainfall between June and August was 13 per cent below the long-period average.
Power generation during these five months rose nearly 10.5 per cent year-on-year. Renewable energy generation, too, surged 20.7 per cent, but coal-fired power continued to provide base-load support amid the lack of adequate energy storage to meet round-the-clock demand.
Out of the country’s 190 thermal plants, 51 were operating with critically low coal stocks in August, compared with 20 a year earlier. “Most of these plants rely on domestic coal, underscoring the importance of timely inventory replenishment,” the report said.
Crisil said inventory stress stood at 72 per cent at Rajasthan’s coal-based plants, 69 per cent in Madhya Pradesh and 60 per cent in Andhra Pradesh.
The Central Electricity Authority deems coal stocks at power plants critical when they fall 25 per cent below the normative level. Bihar and Jharkhand also faced considerable stress, while 20-31 per cent of coal-based capacity in other major states was similarly affected, the study highlighted. In contrast, Odisha and West Bengal remained relatively better placed.
“India’s pithead inventories moderated sharply from a peak of 157 MT in early March 2026 to 76 MT in August 2026, reflecting the normalisation of elevated stocks. Current levels remain broadly aligned with the average of 76.1 MT recorded across August 2024 and 2025. This indicates that despite the significant drawdown, coal availability is adequate and there is no material supply-side stress,” said Sehul Bhatt, director, Crisil Intelligence.
The report further mentioned that the key challenge had been the mismatch between rising demand and transportation capacity. “Prolonged rains across the eastern coal belt disrupted mining operations and hampered coal evacuation,” it said.
During April-August, rake loading increased by only around 5 per cent and coal receipts by 3 per cent, even as coal consumption surged. Consequently, incremental evacuation was insufficient to replenish inventories at power plants. To ease the situation, Coal India permitted power plants with fuel supply agreements to lift additional coal by road, alongside rail transport, from September 7, 2026, the analysis emphasised.
“In the second half of this fiscal, electricity demand, coal-based generation, coal consumption and coal dispatches to power plants are all expected to grow in a narrow range of 6-7 per cent year-on-year,” said Surbhi Kaushal, associate director, Crisil Intelligence, adding that power demand was estimated at 860-870 billion units, while coal-based generation was likely to retain its dominant 65-70 per cent share of India’s electricity mix. She noted that the decline in power plant stocks appeared to be a temporary logistical issue rather than a sign of any structural supply constraint.
However, downside risks stem from adverse weather conditions that could further disrupt mining and coal evacuation and from delays in enhancing rail availability and rake-loading capacity. A sustained increase in coal dispatches will be essential to rebuild stocks towards the historical average cover of 16-18 days.
