Key facts
- India is considering a mandate for power plants to blend up to 5% of imported coal with domestic coal.
- As many as 74 coal-fired power plants had fewer than three days' worth of coal stocks as of the September 19-20 weekend.
- Nearly 40% of India's operational coal plants have critically low coal inventories.
- India's total coal demand is projected to rise 4.2% to 1.353 billion tons this year, according to the IEA.
India is contemplating a policy to mandate power plants to blend up to 5% of imported coal with domestically sourced coal, according to government sources familiar with the discussions. This potential measure comes as coal stocks at many Indian power facilities have dwindled significantly due to logistics issues and soaring electricity demand, exacerbated by monsoon rains and the El Niño phenomenon.
Most Indian power plants currently operate on domestic coal, aligning with a two-year policy aimed at boosting domestic production and reducing import reliance. However, recent months have seen a rapid depletion of coal inventories, with nearly 40% of operational coal plants facing critically low stock levels. As of the September 19-20 weekend, 74 coal-fired power plants had less than three days' worth of coal, a sharp increase from the previous week. Despite these low levels, no critical supply issues are currently faced, as the inventory depletion is attributed to domestic transportation disruptions amid rising demand.
The International Energy Agency (IEA) projected in its Coal Mid-Year Update 2026 that India's total coal demand will increase by 4.2% to 1.353 billion tons this year, reversing a slight drop from the previous year. This rise in demand, coupled with disruptions in oil and gas at the Strait of Hormuz, underscores the country's energy challenges.