India's Coal Stocks Hit 9-Day Low Despite Renewable Growth

India’s thermal power sector faced acute inventory stress in August 2026 as coal stocks at power plants fell 42% year-on-year to 29 million tonnes. This drawdown reduced the stock cover to approximately nine days, the lowest level recorded since November 2023, according to data from Crisil Intelligence. The decline occurred even as renewable energy generation expanded rapidly, indicating that the grid remains heavily dependent on coal for reliable, round-the-clock electricity supply.

The inventory squeeze coincided with a 13% increase in coal-based generation and a 9.5% rise in overall power demand between April and August 2026. Demand was driven by an unusually hot summer and below-normal monsoon rainfall. While renewable generation grew 20.7% during this period, the intermittent nature of solar and wind power meant that coal-fired plants had to bridge the gap, consuming more fuel than was being replenished at the plant sites.

Plant Inventories Drop Sharply

Coal consumption by thermal plants rose 8% to 395 million tonnes in the five-month period, outpacing receipts which increased only 3%. This mismatch left 51 of India’s 190 thermal plants operating with critically low stocks by August, up from 20 plants a year earlier. The stress was most acute in Rajasthan, Madhya Pradesh, and Andhra Pradesh, where 72%, 69%, and 60% of coal-based capacity, respectively, fell below normative levels. Bihar and Jharkhand also reported significant inventory shortages affecting nearly half of their coal-based generation capacity.

Supply Logistics Drive Shortage

Crisil Intelligence attributes the inventory drop primarily to logistical disruptions rather than a structural shortage at the mine. Prolonged rains in the eastern coal belt hindered mining operations and evacuation, causing rake loading to grow only 5% against an 8% rise in consumption. Despite the sharp drop in plant-level stocks, pithead inventories moderated from a peak of 157 million tonnes in March to 76 million tonnes in August, aligning with historical averages. This suggests that national coal availability remains adequate, with the bottleneck residing in the transport and dispatch chain.

Coal Retains Dominant Grid Share

For the second half of the fiscal year, Crisil Intelligence projects that coal-based generation will retain a 65-70% share of India’s total electricity output. This outlook assumes that power demand will grow in a narrow 6-7% range, reaching an estimated 860-870 billion units. To manage the ongoing pressure, Coal India has permitted plants with fuel supply agreements to lift additional coal by road, aiming to stabilize plant-level inventories without requiring a drastic increase in mine-level extraction rates.