Coal inventories at power plants fall to 9 days, lowest in 34 months: Crisil

Coal inventories at India’s thermal power plants fell around 42% year-on-year to 29 million tonnes (MT) in August 2026 from 50 MT a year earlier, according to a Crisil Intelligence report. Coal stock cover nearly halved to nine days from 17 days, the lowest level since November 2023.

The decline came as coal-based power generation rose around 13% amid higher electricity demand. The depletion was concentrated among plants dependent on domestic coal, highlighting challenges in timely inventory replenishment,

the report said.

Between April and August, coal consumption by thermal power plants rose around 8% year-on-year to 395 MT, while power demand increased 9.5%, driven by an abnormally hot summer and a below-normal southwest monsoon. Cumulative rainfall between June and August was 13% below the long-period average, the report said.

Overall power generation increased around 10.5% year-on-year during the five months. Renewable energy generation rose 20.7%, but coal-fired power continued to play a critical role in meeting round-the-clock demand, according to the report.

In August, 51 of the country’s 190 thermal power plants were operating with critically low coal stocks, compared with 20 a year earlier. Most of these plants rely on domestic coal.

The Central Electricity Authority considers coal stocks at power plants critical when they fall 25% below the normative level.

The inventory stress was concentrated in a handful of states. About 72% of coal-based generation capacity in Rajasthan, 69% in Madhya Pradesh and 60% in Andhra Pradesh was operating with critically low coal stocks. Bihar and Jharkhand had 45% and 48% of their coal-based capacity, respectively, in the same category.

In contrast, 10% of coal-based capacity in Odisha and 6% in West Bengal was operating with critically low stocks.

Pithead inventories remain adequate

Crisil Intelligence Director Sehul Bhatt said, "India's pithead inventories moderated sharply from a peak of 157 MT in early March 2026 to ~76 MT in August 2026, reflecting the normalisation of elevated stocks."

Bhatt said current levels remain broadly aligned with the average of 76.1 MT recorded across August 2024 and 2025. This, he added, "indicates that despite the significant drawdown, coal availability is adequate and there is no material supply-side stress."

The report identified a mismatch between rising power demand and transportation capacity as the key challenge. Prolonged rains across the eastern coal belt disrupted mining operations and hampered coal evacuation.

Between April and August, rake loading increased around 5%, while coal receipts rose 3%, even as coal consumption increased 8%. This left incremental evacuation insufficient to replenish inventories at power plants.

To ease the situation, Coal India permitted power plants with fuel supply agreements to lift additional coal by road alongside rail transport from September 7, 2026.

Coal stocks seen recovering

Crisil Intelligence Associate Director Surbhi Kaushal expects electricity demand, coal-based generation, coal consumption and coal dispatches to power plants to grow in a narrow range of 6-7% year-on-year in the second half of the fiscal year.

Power demand is estimated at 860-870 billion units, while coal-based generation is expected to retain a 65-70% share of India’s electricity mix, according to the report.

Kaushal said, "Given adequate inventories at miners and improving evacuation logistics, higher dispatch requirements should be met comfortably."

"As such, the recent decline in power plant stocks appears to be a temporary logistical issue rather than a sign of any structural supply constraint," she added.

The report therefore views the recent decline in power plant stocks as a temporary logistical issue rather than a structural supply constraint.

The key downside risks are adverse weather conditions that could further disrupt mining and coal evacuation, as well as delays in improving rail availability and rake loading capacity.

Crisil Intelligence said sustained higher coal dispatches will be essential to rebuild power plant stocks towards the historical average cover of 16-18 days.

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