Coal Stock Levels Plunge to 58 Percent as Surging Power Demand Puts Strain on Thermal Plants

Coal Stock Levels Plunge to 58 Percent as Surging Power Demand Puts Strain on Thermal Plants​

As heatwave conditions intensify and monsoon proves deficient, coal stocks at thermal power plants are facing a significant decline. Inventory levels have fallen sharply, with domestic and imported coal-based plants now holding only 44.5 million tonnes as of June 28, down 27 percent from the previous year. This downturn is driven by relentless high electricity demand across the country.

Sharp Decline in Coal Stocks at Thermal Plants​

Data released by the Central Electricity Authority reveals a critical situation regarding coal reserves. The stocks at domestic and imported coal-based power plants have dropped to 44.5 million tonnes from 61.3 million tonnes on June 28, 2025. Out of 190 thermal plants with a combined generation capacity of 224 GW, 34 facilities reported critical stock levels.

A plant is categorized as having critical coal stocks when its inventory falls below 25 percent of the normative level. While only 16 plants were in this category last year, 26 domestic coal-based plants are currently showing critical inventories. The recommended annual requirement for coal at this time of year stands around 75.8 million tonnes.

Power Demand Rises Despite Supply Constraints​

The decline in coal stocks coincides with a worrying surge in power consumption necessitated by weak rainfall and extreme heatwave conditions. India’s peak power demand, which had temporarily eased to 237 GW in the first half of June, has started climbing again. It touched 259 GW as of June 29, according to Grid India data.

The government estimates that the nation's peak power demand could reach 271 GW this year. Delhi’s power demand also hit a fresh record amid the ongoing heatwave, recording 8,748 MW on June 29 and surpassing all previous highs. The India Meteorological Department has forecasted continued heatwave conditions for various regions until June 30.

ICRA Outlook: Growth and Coal Dependency Remain Key​

Ankit Jain, Vice President and Co-Group Head at ICRA, stated that annual power demand showed strong growth of 7.1 percent in the first two months of FY27. He expects this trend to rebound through FY27, supported by anticipated peak summer conditions and a lower base for comparison.

ICRA projects net capacity addition to remain robust at approximately 50 GW in FY27, driven primarily by the renewable energy pipeline. India added 9.6 GW of generation capacity during April-May, largely due to new renewable energy additions. This growth is supported by a healthy project pipeline and the staggered expiry of the waiver on inter-state transmission charges starting June 30, 2025.

Analyst Warning: Sustained Coal Supply is Critical​

However, ICRA emphasized that sustained recovery in coal production and supply remains absolutely critical to maintaining adequate buffer stocks. Jain cautioned that further decline from current levels could result in the system being unable to meet a significant surge in peak power demand. The entire generation stability hinges on the availability of reliable coal inputs despite increased renewable energy additions.