India's worst power squeeze in three years puts coal back at the centre of its planning

India may need substantially more coal-fired capacity than planned, the head of its electricity planning body said on 13 October. "Now, probably it will go up to 105 GW or even 150 GW," Ghanshyam Prasad, chairperson of the Central Electricity Authority (CEA), told an Indian Chamber of Commerce event in New Delhi — referring, Reuters reported, to capacity needed beyond the 97 GW of coal additions India planned last year. His words landed the same week the coal ministry said the squeeze was easing, stocks held above 18 million tonnes since 29 September (PIB, 12 October) — and the month September's shortages hit 560 million kilowatt-hours, the worst since August 2023 (Reuters, 1 October), with Chhattisgarh's small steel mills losing power 10 to 12 hours a day. Both pictures are dated and sourced; the tension between them is the story.

What happened

The shortage record is in the grid operator's numbers, calculated by Reuters from daily Grid-India data and published on 1 October: 560 million kWh short in September, the most since August 2023, even though coal plants ran at higher capacity for a sixth straight month on El Niño-driven demand and industry. Coal generation rose 13.3 per cent year on year, and about two in five coal plants were running on critically low stocks, on separate government data cited in the same report.

The stock picture is where government and analysts part ways. As of 4 October, 69 power stations — more than two-fifths of the coal fleet — had four days of fuel or less, the lowest since December 2021, with inventories near a five-year low, Moody's wrote on 7 October. As of 10 October, feedstock at almost half of India's coal-fired plants was below a quarter of required levels, the power ministry said, via Bloomberg, on 12 October, and the grid averaged a shortfall of nearly 4 gigawatts a day over 1–10 October on Grid Controller of India data — about 2 million rural households, on Bloomberg's calculation. The weakest monsoon since 2015 cut hydropower while heat lifted cooling and irrigation demand; late monsoon rain then flooded the eastern coalfields, crimping production and the railways that move the fuel.

The ministry's answer: the worst has passed. On 9 October the Ministry of Coal published a clarification aimed at media reports of shortage risk: the critical-stock tag, it said, is a norm-based early-warning trigger, not evidence a plant is about to shut down; daily supplies to the power sector had risen about 36 per cent from the September low; and the daily drawdown had more than halved, from 0.243 MT in September to 0.116 MT in October, leaving the position stabilising, though stocks had not yet begun to rebuild (PIB, 9 October). On 12 October it published its series: stocks at domestic coal-based plants held above 18 MT throughout — 18.932 MT on 29 September, 18.205 MT on 10 October — against a 7.28 MT September decline; rakes averaged 469 a day over 1–10 October against 426 in September; supply of 2.49 MT a day beat the 2.37 MT plan on nine of ten days (PIB, 12 October). The two October depletion rates are snapshots three days apart.

The cuts on the ground do not follow monthly averages. In Uttarakhand, where the Ganga and Yamuna rise, the state utility invoked force majeure and, since 19 September, staggered cuts of 35 minutes to 15 hours by consumer category, with heavy industry in Kumaon and Garhwal taking 15-hour cuts on 21–22 September (ETEnergyworld, 25 September). In Punjab, Chief Minister Bhagwant Mann said on 14 September that flood water in Jharkhand's coal mines, Pachwara above all, had caused a nationwide shortage, and that Coal India had agreed to supply the state's two private thermal plants so all five would get enough coal in coming days — a reported assurance in Hindi, our translation, not a delivered outcome (Dainik Jagran, 14 September).

The numbers

Key figures, dated and sourced. The stock measures use different yardsticks — tonnes, days, share of normative — and are not directly comparable, but together they locate the stress. Shortfall: 560 million kWh in September (Reuters/Grid-India, 1 October). Grid gap: nearly 4 gigawatts a day, 1–10 October (Grid Controller of India, via Bloomberg, 12 October). Stocks: 18.205 MT on 10 October, depletion slowing from about 0.24 MT a day in September to about 0.06 in October (PIB, 12 October); 69 stations at four days or less on 4 October (Moody's, 7 October); almost half the fleet below a quarter of required levels on 10 October (power ministry, via Bloomberg, 12 October). Mix: coal 66.03 per cent of a 174.17 billion kWh September total, renewables 29.62 billion kWh — about 17 per cent (Grid-India, via Reuters, 1 October). Prices: Coal India's average spot premium 94 per cent over base in September against 59 in August, above 200 per cent at two subsidiaries (Coal India data, via Bloomberg, 12 October). Hydro: Uttarakhand peak generation 1,094 MW a year ago against 912 MW, demand 53 million units a day against 48 million supplied (ETEnergyworld, 25 September). Capacity: about 230 GW today, last year's plan 97 GW more to reach 307 GW by 2035 (Reuters, 13 October) — figures that do not reconcile, and we come to that.

What the region is saying

Prasad's floated range comes with his argument: peak demand has run 45 to 50 GW higher than a year earlier, partly because weak monsoon rains cut hydro output, Reuters reported on 13 October. The coal push, he said, does not mean slowing renewables — India added about 50 GW of clean capacity last year and expects more than 50 GW a year — but must be complemented by nuclear and pumped-storage hydropower to keep the grid stable.

In the steel belt the shortage is measured in melted metal. Small mills in Chhattisgarh are suffering outages of 10 to 12 hours a day, forcing plants to reduce output, said Manish Dhuppad, general secretary of the Chhattisgarh Mini Steel Plant Association, describing hot metal solidifying when the supply goes just before tapping: "we need to melt it again." In Ludhiana, Punjab's industrial heart, Badish Jindal, who runs a steel wire plant, said unscheduled cuts of three to four hours push him onto expensive back-up generators, disrupting operations, deliveries and product quality and raising accident risks as machines stop and restart. "The power cuts are unscheduled." (Bloomberg, 12 October)

The voices cut across the economy. In Shamli district, Uttar Pradesh, some villages face up to seven hours of blackouts a day; Devinder Singh, a grain and sugarcane farmer, told Bloomberg the solar build-out covers his daytime irrigation but not the evenings, and the cost is what bites: "My bigger concern is the rising cost of electricity." In the hills, Uttarakhand Power Corporation's MD, P C Dhyani, put the hydro collapse plainly — peak generation down from 1,094 MW to 912 MW — and the cause in four words: "river flows have declined." His operations director, M R Arya, is contracting coal power from Korba, Chhattisgarh, to 2050 at around Rs 5.2 a unit: "We need to diversify our sources because of our heavy dependence on hydropower" (ETEnergyworld, 25 September).

Analysts read September as demand outrunning maintenance. "A rise in peak power demand in September, driven by higher industrial consumption," Rupesh Sankhe of Elara Securities began, before citing the plants under maintenance that left the system short (Reuters, 1 October); in Moody's feed on 7 October he argued cooler months would let utilities shed load daily while Coal India and the railways lift supplies ahead of summer. Captive power producers, the factories that generate their own electricity, say the grid-first policy leaves them paying high auction prices and waiting months for rail wagons, in the words of Rajiv Agarwal of the Indian Captive Power Producers Association; Coal India did not immediately reply to Bloomberg's request for comment. And Mann's promise of relief remains a promise, reported on 14 September, before the worst October stock numbers.

How India got here: December 2021, again

The last time stocks were this thin was December 2021, when the post-pandemic rebound ran down inventories across India and its neighbours, Moody's noted on 7 October. The structure behind the repeat is unchanged: coal produces nearly 70 per cent of India's electricity, and almost 90 per cent of plants with low inventories are located away from coal mines. The renewable build-out is real — about 50 GW added last year, on Prasad's figures — but it answers the daytime peak; analysts cited by Reuters point to a lack of battery storage to hold clean power for the evening hours, when hydro is down 20 per cent. The ministry contests the framing, not the physics: rebuilding stocks before summer, it says, needs 465–475 rakes a day through the cool months (PIB, 9 October).

What it means for energy, water and industry

Three consequences are visible in dated reporting. Output: mills from Chhattisgarh to Punjab are cutting production or running expensive back-up generators, costs that land in unit economics long before any index (Bloomberg, 12 October). Input prices: a 94 per cent spot premium over Coal India's base price in September — above 200 per cent at two subsidiaries — is a direct cost for industrial buyers outside the protected grid queue, and grid bills have risen in most states in recent years on coal and network costs (Bloomberg, 12 October). Delivery risk with a legal shape: when a utility invokes force majeure and rations supply by schedule, as Uttarakhand's did, with scheduled cuts from 19 September, the factories and households on its network carry that risk directly (ETEnergyworld, 25 September). For planners outside India, the open question is whether this floated range hardens into orders, or the evening peak is met with the firm capacity the planner himself says the grid needs. For anyone whose business depends on Himalayan water, Uttarakhand is the case study: the same weak rains that emptied the rivers pushed it to contract coal power to 2050.

What to watch

Dates that matter. Through February: the stock-rebuild window before next summer, narrow in Moody's judgement and needing 465–475 rakes a day on the ministry's figures. Monthly: Uttarakhand Power Corporation's extra-supply requests to the central grid — 150 MW in November, 300 in December, 400 in January, 300 in February, 175 in March — budgeted for festive demand and the Haridwar Ardh Kumbh, whose own dates are not in our sources (ETEnergyworld, 25 September). Monthly: Coal India's auction premiums — the sharpest gauge here; the next reading shows whether October's rake loading reached the market. Continuous: PIB's releases and Grid-India's daily data behind Reuters' shortfall calculations. The CEA's next formal plan revision has no confirmed date; until it comes, "105 GW or even 150 GW" is one official's floated range, not a programme.

Our reading

The 150 GW figure is not an order, an approval or a plan. Even its arithmetic is uncertain. Reuters' baseline does not reconcile — about 230 GW today plus 97 GW of additions is not the 307 GW by 2035 the report gives, suggesting an older, smaller baseline — and the report does not settle whether Prasad meant additions rising from 97 GW to 105–150 GW, or capacity on top; we have not added the figures. The shape of the problem, though, is supported: a weak monsoon cut hydro 20 per cent and flooded the coal railways in the same season, the evening peak keeps growing, and there is not yet enough storage to shift daytime solar into the hours when the mills and farmers above lose power. On the stocks, government and critics describe one system at two resolutions: the ministry's totals — 18.2 MT, depletion slowing, 12 October — are aggregates; Moody's 69 stations at four days or less and the power ministry's half a fleet below a quarter of normative levels, dated 4 and 10 October, are distributions. A system can be stabilising in total and still starving its endpoints. Our caveats: we did not retrieve the CEA's daily coal bulletin, so stocks reach us via the power ministry through Bloomberg and Moody's through TradingView, the shortfall series through Reuters' calculations of Grid-India data; Mann's assurances are reported speech from September; Coal India has not answered its critics on the record. None of that overturns a claim above; all of it argues for rechecking the primary numbers before money moves.

By The Stratawire newsroom.