India Plans to Add About 10 Million Tonnes of Coal at Thermal Power Plants by December, Targeting 55 Million Tonnes by Year-End

India is building up coal stocks at its power stations as the season of peak electricity demand recedes, aiming to avoid the shortages that have caused blackouts in past years and to prepare for the next surge in demand.

Thermal power plants aim to add about 10 million tonnes of coal to their stocks by the end of December, from 18.1 million tonnes at present, according to a report by Whalesbook on Friday, October 30, citing official projections. The government's target is 55 million tonnes of closing coal stock at power plants by the end of the financial year in March.

Demand has eased

Peak power demand has eased to about 217 gigawatts (GW), from recent highs of about 270 GW, according to the report. Demand typically falls after the summer and monsoon months as temperatures drop and air-conditioning use declines, giving power plants an opportunity to rebuild coal inventories.

The government has made restocking a priority. Coal movements by rail averaged 472 rakes per day in October, according to the report, supporting supply to power stations, though weather in eastern India created some difficulties.

Critical stocks

The number of power units with critically low coal stocks fell to 79 from 89 earlier in October, according to the report, though 79 units still report critical levels. A plant is considered to have critical stocks when its inventory falls below a certain number of days of consumption, raising the risk of generation cuts if supplies are disrupted.

Why buffers matter

Larger coal buffers help power plants avoid costly purchases of electricity on the spot market and keep generation steady. When coal stocks run low, plants may be forced to reduce output, and distribution companies may need to buy expensive power or impose load-shedding.

India experienced severe coal shortages at power plants in 2021 and 2022, when demand rebounded after the pandemic and coal supplies failed to keep pace. Those shortages led to power cuts in several states and prompted the government to take measures to boost coal production, transport and stockpiling.

Coal's central role

Coal remains the dominant source of electricity in India, accounting for the majority of power generation. Despite the rapid growth of solar and wind, coal-fired plants provide the steady baseload and evening peak power that India's grid needs, particularly when solar generation falls after sunset.

India's coal production has risen to record levels, led by state-owned Coal India and its subsidiaries, as well as captive and commercial mines operated by private companies. The government has also reduced reliance on imported coal, which became expensive during the global energy crisis.

The import question

India has aimed to reduce thermal coal imports for power plants. Imported coal is still used by some coastal power plants designed to burn it, and by others blending it with domestic coal. High international energy prices, linked to the conflict in the Middle East, make domestic coal more attractive.

Climate tension

The emphasis on coal stockpiling highlights the tension between India's energy security needs and its climate commitments. India has committed to reaching net-zero emissions by 2070 and to achieving 500 GW of non-fossil fuel capacity by 2030. However, with electricity demand growing rapidly, the government has said coal will remain essential for decades.

The growth of battery storage, pumped hydro and other forms of flexible power could gradually reduce dependence on coal for meeting peak demand. India is accelerating investment in storage, but it will take years to reach the scale needed.

Winter demand

While demand eases after the monsoon, winter brings its own peaks, particularly in northern India, where heating demand rises and solar output is lower. Adequate coal stocks help ensure reliable supply through the winter months and into the next summer, when demand typically reaches new records.

Implications for Coal India

Higher stockpiling targets support demand for Coal India's output. However, the company's results also depend on prices, costs and the mix of sales through fuel supply agreements and auctions. Coal India's shares fell about 1% on Friday after its quarterly profit missed expectations, according to HDFC Sky.

The logistics of coal

Moving coal from mines, concentrated in eastern and central states such as Jharkhand, Odisha, Chhattisgarh and Madhya Pradesh, to power plants across the country is a major logistical task. Indian Railways carries the bulk of this coal, and coal is the railways' largest source of freight revenue. Rail capacity constraints, including congestion on key corridors, have at times limited supplies to power plants.

The government has invested in dedicated freight corridors and new rail lines to improve coal transport, and has encouraged greater use of coastal shipping and conveyor systems from mines.

Weather and supply

The monsoon season often disrupts coal production and transport, as rain floods open-cast mines and affects loading operations. Stocks at power plants typically decline during the monsoon and are rebuilt in the following months. The current restocking drive is part of this seasonal cycle, but the government is aiming for higher buffers than in previous years.

The role of renewables in peak demand

As India's solar capacity grows, it is increasingly meeting daytime demand, allowing coal plants to reduce output during the day. However, the evening peak, after the sun sets, still relies heavily on coal. Battery storage, which can store surplus solar power for use in the evening, is expected to gradually reduce this dependence. India has launched tenders for large-scale battery storage and introduced viability gap funding to support it.

What comes next

The government will monitor coal stocks closely through the winter, and the pace of restocking will depend on production, rail logistics and demand. Building stocks to 55 million tonnes by March would give power plants a substantial cushion heading into the summer of 2027, when electricity demand is expected to reach new highs. For India's energy planners, ensuring reliable supply while advancing the clean energy transition remains a delicate balancing act.

Consumers and industries that depend on reliable electricity will be the ultimate beneficiaries if the restocking drive succeeds.

Environmental groups, meanwhile, continue to urge faster investment in storage and transmission so that India can reduce its reliance on coal for meeting peak demand, citing the health and climate costs of coal-fired power generation in the country's most polluted regions. The balance between energy security and climate goals will remain one of the defining policy questions for India in the years ahead.