India's Coal Squeeze Reaches Factories as 96 Power Plants Face Critical Fuel Stocks

Coal supplies tighten as Gujarat asks factories to shift work

India's Central Electricity Authority counted 96 of 191 coal power plants with critically low fuel stocks on October 19, 2026, up from 60 in mid September. Gujarat has asked factories to move production away from the evening electricity peak, bringing the strain on power supplies into the working day of one of the country's major industrial states.

The number of plants facing critical inventories rose by 36, or 60%, in roughly a month. Coal stocks across power stations fell about 5% from the start of October, even as the coal ministry increased deliveries. Many affected plants held enough coal for fewer than three days of generation.

Hot weather linked to El Niño, greater irrigation needs and industrial activity have pushed electricity demand higher. Weak monsoon rainfall has also reduced hydropower output, leaving coal plants to produce more electricity while consuming their fuel reserves faster.

September's electricity shortfall reached 560 million kilowatt hours, according to the CEA, the largest monthly gap since August 2023. Shortages were also described as the worst for any September in nearly a decade. Coal generation increased, but the extra output still left demand unmet at some times and places.

Gujarat's response shows where the pressure is most immediate: the hours after daytime solar production fades. Uttar Gujarat Vij Company Ltd has sent messages asking industries and residents to conserve electricity between 5 p.m. and 11 p.m. Factories have been urged to shift work voluntarily to other hours.

What the critical stock figures mean

The October 19 CEA count put just over half of the monitored coal plants in the critical category. Earlier figures showed 87 of 190 plants with critical stocks on October 8, compared with 50 in the first week of September.

Fuel inventories can be measured in two useful ways: how many days a plant can operate with the coal it holds, and how much of its prescribed stock requirement it has available. The first measure describes its immediate operating cushion; the second compares that cushion with the reserve it is expected to maintain.

Power ministry figures for October 17 showed nearly half of plants holding less than a quarter of their required inventories. The coal ministry said it was closely monitoring plants flagged for critical stocks and redirecting supplies to sustain generation.

An October 8 snapshot put power station coal stocks at 20.6 million tonnes against a recommended 61.2 million tonnes, roughly one third of the requirement. That left a gap of about 40.6 million tonnes between actual inventories and the recommended reserve.

The recent sequence shows how the pressure developed:

• Mid September: 60 coal plants had critically low stocks.
• October 1: an order took effect requiring more than 100 coal plants to operate at full capacity through at least the end of the year.
• October 8: 87 of 190 monitored plants had critical inventories.
• October 19: the critical count reached 96 of 191 plants.
• October 21: Gujarat's appeal for factories to reduce evening electricity use became public.

Heat and weaker rainfall squeeze both sides of the grid

India's daily peak electricity demand has been running about 45 to 50 gigawatts above the previous year's level, according to the CEA. A gigawatt measures the rate at which electricity is being generated or used. Higher peak demand means the grid needs more power available at the same moment.

Poor rainfall has added pressure in two directions. Lower water availability has reduced electricity production at hydropower stations, while dry conditions have increased farmers' need to pump water for irrigation. Persistent heat has also kept air conditioners and other cooling equipment running beyond the usual summer period.

CEA figures showed coal generation rising 13.3% in September from a year earlier, while hydropower output fell 20%. Financial research estimates put the hydro decline at 16%, to 19 billion units, and growth in the broader thermal generation category at 16%, to 118 billion units.

Both sets of figures describe the same operational squeeze: less electricity from water and more work for plants that burn fuel. Maintenance at power stations has added another constraint on the supply available to meet demand.

Why the evening hours are especially difficult

Gujarat's request covers six hours, from 5 p.m. to 11 p.m., when factories, households and other users can compete for electricity as solar output falls. Moving a production shift outside that window can reduce the maximum amount of power the state needs at once, even if a factory uses a similar amount across the full day.

Solar electricity is available when sunlight reaches the panels. Batteries can save some of that electricity for later, but India lacks enough storage to carry all the needed daytime output into the evening. Coal plants therefore remain central to meeting demand after sunset.

Gujarat has sought additional coal and electricity from the central government. It is also planning coal, nuclear and battery storage projects to meet future consumption. The immediate factory appeal is voluntary; the request sets out a change in production timing rather than a compulsory closure of factories.

Punjab, Madhya Pradesh, Bihar, Kerala, Tamil Nadu and Himachal Pradesh are also seeking electricity from coal plants through contracts covering short periods, according to power ministry data. Requests for extra electricity have also been reported from Rajasthan, Maharashtra, Andhra Pradesh, West Bengal, Uttar Pradesh, Chhattisgarh and Delhi.

For industrial users, the practical choice may involve rescheduling staff and machinery or competing for scarce power during the evening. For electricity suppliers, securing extra generation means finding both a plant with spare output and the fuel needed to keep it operating.

More coal is arriving, but inventories are still falling

The coal ministry said daily supplies to the power sector had increased about 36% from September levels. Rail loading averaged more than 465 rakes a day in October, and the target of 470 was reached on three consecutive days. A rake is a connected set of freight wagons carrying coal.

Rail transport matters because coal production and electricity generation take place at different locations. Mining more fuel helps a power station only when that coal can be loaded, transported, unloaded and fed into its boilers. The government has asked Coal India Ltd to raise output and the railways to ensure timely deliveries.

The ministry said maintaining transport at 465 to 475 rakes a day should help stabilise inventories and rebuild reserves for festive demand, winter and the following summer. Deliveries by road and other means had also increased.

Stocks nevertheless continued to decline during the first 17 days of October, by an average of about 48,000 tonnes daily. That was one fifth of September's rate, equivalent to roughly 240,000 tonnes a day in the earlier month. The smaller daily loss shows that the balance between deliveries and consumption had improved, while the remaining decline kept reserves under pressure.

Why compulsory imports have been put aside

Government officials have shelved a proposal to require power plants to blend imported coal with domestic supplies, according to people familiar with the discussions. The plan would have added another source of fuel, but higher international prices and a weaker rupee made incoming cargoes more expensive.

Benchmark thermal coal prices were at their highest in three years. Financial research figures put Indonesian coal at $111 a tonne in September, up 47% from a year earlier. A weaker rupee increases the local currency cost of purchases priced in dollars.

India has previously required imports to supplement domestic coal during supply squeezes. The current response places greater weight on domestic production and transport, alongside expectations that cooler weather will ease electricity consumption. The power ministry and Coal India had not publicly confirmed the discussions about shelving the import requirement.

Natural gas has also become more costly. Financial research estimates showed spot liquefied natural gas prices rising from $10.8 per million British thermal units in February to $26 by late September, more than doubling. Higher gas prices make that fuel a more expensive option for filling electricity gaps.

The International Energy Agency's Coal Mid-Year Update 2026 projected Indian coal demand at 1.353 billion tonnes for the year, up 4.2% after a decline in 2025. The agency linked the increase to higher electricity demand and oil and gas disruptions at the Strait of Hormuz, the shipping passage connecting the Persian Gulf with the open sea.

Higher demand is also pushing up power costs

September electricity consumption reached an estimated 162 billion units, up 11% from a year earlier, while peak demand rose 17% to 269 gigawatts. One unit of electricity is one kilowatt hour, the amount used by an appliance drawing one kilowatt for one hour.

The evening peak deficit exceeded 7 gigawatts in the financial research estimates. That measures a shortage of power at a particular time. The CEA's monthly shortfall of 560 million kilowatt hours measures accumulated unmet electricity demand across the month.

Wholesale prices rose as supply tightened. The weighted average market clearing price on the Indian Energy Exchange reached 4.9 rupees per kilowatt hour in September, compared with 3.4 rupees a year earlier, an increase of about 44%. This is a price in the electricity trading market; household bills depend on the tariffs and purchasing arrangements of their suppliers.

Distribution companies also faced financial pressure, with outstanding payments to generators estimated at 85,700 crore rupees, or 857 billion rupees, at September's end. Buying additional electricity at higher market prices adds to the costs of companies already carrying unpaid bills.

The squeeze is shaping plans for new power stations

Ghanshyam Prasad, chairperson of the CEA, said at an Indian Chamber of Commerce event that India could need 105 to 150 gigawatts of additional coal capacity beyond its existing plan. That plan already envisages 97 gigawatts of coal capacity additions by 2035.

State purchasing decisions show demand for coal generation extending beyond the immediate shortage. Uttar Pradesh and Assam authorities have sought as much as 7 gigawatts of future coal power supply through bids. Research on those purchases also described more than 17 gigawatts contracted during an earlier period beginning in 2024.

India is continuing to add renewable electricity capacity. Prasad said about 50 gigawatts had been installed in the previous year and annual additions were expected to exceed 50 gigawatts. He identified nuclear power and pumped storage hydropower as resources that could support renewable generation and grid stability.

Pumped storage uses electricity to move water uphill, then releases it through turbines when power is needed. Like batteries, it can shift electricity availability from one part of the day to another. Such projects address the timing problem visible in Gujarat, while coal deliveries address the immediate fuel shortage.

Cooler weather may provide room to rebuild reserves

The government expects electricity consumption to ease as temperatures decline, allowing coal reserves to recover. A forecast from the European Centre for Medium-Range Weather Forecasts pointed to slightly cooler conditions over the following two weeks, although temperatures were still expected to remain above the average for the preceding 30 years.

Power stations enter that period with a smaller daily stock decline than in September, but with inventories described as the lowest in nearly five years. Rebuilding the reserve requires deliveries to exceed coal consumption consistently, rather than merely keep pace with it.

The order for more than 100 coal plants to operate at full capacity runs through at least December 31. No firm date has been given for restoring recommended fuel inventories. Until supplies recover, Gujarat's effort to move factory demand out of the evening peak provides a concrete example of how states are trying to stretch the electricity already available.

Key Points

• The CEA counted 96 of 191 coal plants with critically low stocks on October 19, up from 60 in mid September.
• Power station coal inventories fell about 5% from the beginning of October despite increased deliveries.
• Gujarat asked factories to shift production voluntarily away from 5 p.m. to 11 p.m.
• September's electricity shortfall reached 560 million kilowatt hours as heat increased demand and hydropower output fell.
• A compulsory coal import proposal was shelved amid high international prices and a weaker rupee.
• Domestic coal production, rail deliveries and cooler weather are central to efforts to rebuild fuel reserves.