Coal inventories at India’s thermal power plants have fallen to their lowest level in nearly three years, raising concerns over fuel availability as electricity demand and coal consumption continue to rise. 

Coal inventory cover dropped to nine days in August 2026 from 17 days a year earlier, the lowest level since November 2023, according to Crisil Intelligence.

Coal inventories at power plants declined 42% year-on-year to 29 million tonnes (MT) in August from 50 MT a year earlier. The decline came as coal-based power generation increased amid stronger electricity demand. 

Between April and August, coal consumption by thermal power plants rose around 8% to 395 MT, while electricity demand increased 9.5%. Total power generation grew 10.5% during the period.

The pressure has been particularly visible at individual power stations. Out of 190 thermal power plants, 51 were operating with critically low coal stocks in August, compared with 20 plants a year earlier. Rajasthan, Madhya Pradesh and Andhra Pradesh recorded particularly high levels of stress, with 72%, 69% and 60% of coal-based generation capacity, respectively, operating with critically low stocks.

However, Crisil said the situation does not point to a structural shortage of coal. Inventories at coal producers remained adequate, with pithead stocks standing at around 76 MT in August. The main challenge has been the movement of coal from mines to power plants.

During April-August, railway rake loading increased only 5%, while coal receipts at power plants rose 3%. This was lower than the 8% increase in consumption. Prolonged rains across eastern coal-producing regions also disrupted mining and coal evacuation.

To improve supplies, Coal India allowed power plants with fuel supply agreements to transport additional coal by road along with rail from September 7.

Crisil expects electricity demand, coal-based generation and coal dispatches to grow 6-7% in the second half of FY27. It estimates coal-based generation will continue to account for 65-70% of India’s electricity mix.

The agency expects the current inventory pressure to remain largely temporary, although further weather disruptions and delays in expanding rail capacity could prolong the situation. Rebuilding stocks towards the historical 16-18 days of cover will require sustained higher coal dispatches.

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