India's thermal power plants are grappling with critically low coal inventories, which dropped sharply in August 2026. Stock levels fell by 42% year-on-year, from 50 million tonnes (MT) to just 29 MT, marking the lowest point since November 2023, according to Crisil Intelligence data. This depletion has halved the coal stock cover from 17 days to a mere nine days, raising concerns about the nation's energy security.
Reasons Behind the Critical Shortage
The primary driver for this significant drawdown is a 13% surge in coal-based power generation, necessitated by a substantial increase in electricity demand. Between April and August 2026, overall power demand grew by 9.5%, fueled by an abnormally hot summer and a southwest monsoon that was 13% below the long-period average. Consequently, thermal plants consumed 395 MT of coal during this period, an 8% rise compared to the previous year.
While renewable energy generation saw a robust 20.7% year-on-year increase, its intermittent nature meant that coal-fired power remained indispensable for meeting consistent, round-the-clock demand.
Widespread Impact Across States
The inventory stress is widespread, with 51 out of India's 190 thermal plants operating with critically low coal stocks in August 2026, a sharp increase from 20 plants a year earlier. The Central Electricity Authority defines critical stocks as those falling 25% below normative levels. Plants relying on domestic coal were particularly affected, highlighting challenges in timely replenishment.
Several states experienced acute stress:
- Rajasthan: 72% of coal-based generation capacity.
- Madhya Pradesh: 69% of coal-based generation capacity.
- Andhra Pradesh: 60% of coal-based generation capacity.
Bihar and Jharkhand also faced considerable stress, with 45% and 48% of their capacity, respectively, operating at critical levels. In contrast, Odisha (10%) and West Bengal (6%) were relatively better positioned.
Logistical Hurdles, Not Supply Shortage
Sehul Bhatt, Director at Crisil Intelligence, clarifies that the issue is primarily logistical rather than a fundamental supply shortage. "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," Bhatt stated.
The core challenge lies in the mismatch between rising demand and transportation capacity. Prolonged rains in the eastern coal belt disrupted mining operations and hampered coal evacuation. During April-August, rake loading increased by only 5% and coal receipts by 3%, insufficient to match the surge in consumption.
Mitigation and Future Outlook
To alleviate the situation, Coal India permitted power plants with fuel supply agreements to lift additional coal by road, alongside rail transport, starting September 7, 2026. This measure aims to improve dispatch rates and replenish depleted inventories.
Surbhi Kaushal, Associate Director at Crisil Intelligence, projects that electricity demand, coal-based generation, coal consumption, and dispatches to power plants are all expected to grow in a narrow range of 6-7% year-on-year during the second half of the fiscal year. Power demand is estimated at 860-870 billion units, with coal-based generation maintaining its dominant 65-70% share of India's electricity mix. Given adequate inventories at miners and anticipated improvements in evacuation logistics, higher dispatch requirements are expected to be met comfortably, gradually rebuilding power plant stocks towards the historical average cover of 16-18 days.