India’s power demand surged to 256 gigawatts (GW) in the first week of September, leaving shortages above 20 million units. Driven by this growing demand, about 58 coal plants are now operating on critically low coal stocks, prompting miners to boost coal production and railway rake availability.
This combination of rising demand and supply deficits stems from a weaker monsoon, which has increased the use of irrigation pumps and household air conditioners.
Mint examines this surge in electricity demand and the reasons behind the coal and power shortfalls.
Why has power demand shot up of late?
A weaker monsoon has forced farmers to rely on groundwater pumping for irrigation, driving up power demand. Deficient rainfall has also created hot and humid conditions, leading to a surge in air conditioner usage. The demand for groundwater pumping is particularly high for paddy crops, which require substantial amounts of water during critical stages of growth.
After easing through July and August, electricity demand has begun climbing again, following a record peak demand of 270.8GW reached in May. During the first week of September, demand mostly remained above 255 GW. The Central Electricity Authority projects peak demand to touch 272 GW this year.
What’s driving the widening power deficit?
Along with the surge in demand, a drop in hydro power generation due to weaker monsoons has deepened the overall supply shortfall this year. Amid rainfall deficits, hydro generation fell 14% year-on-year in July, according to Crisil. A lag in coal production and supply logistics caused by rains, coupled with elevated power demand, further exacerbated this supply-demand mismatch.
Electricity shortages stayed above 20 million units during the first week of September—led by northern and western states—sharply higher than the less than 1 MU shortage recorded during the same period last year, when a healthy monsoon kept deficits minimal.
What is the coal stock situation at thermal power plants?
Coal inventories at thermal power plants have fallen in recent months. While stock depletion is typical during the monsoon, as rains disrupt mining while power demand climbs, the drawdown this year is far more acute due to the sudden demand surge. As of 6 September, total coal stock across the country's 190 thermal plants stood at 26.7 million tonnes—enough for an average of 8.5 days of operations. Of these, 58 plants are running on critical coal levels, holding less than 25% of their required inventory.
What measures are being taken to rebuild coal inventories?
Coal miners are stepping up shipments to thermal power plants, with state-run producers loading 444 railway rakes for the power sector on 6 September, up from 370 rakes on 3 September. Additionally, Coal India has seen output pick up as rains subside across its mining regions.
Average daily production by state-owned miners rose about 35% to 1.83 million tonnes on 6 September, compared to around 1.36 million tonnes over the first three days of the month. Coal India noted on 4 September that its mines were gearing up to resume full operational pace as rainfall eased, and would ensure higher output and movement as ground conditions improved.
Coal minister G Kishan Reddy said the country has more than 123 million tonnes of coal in mines, transit and thermal plants, which should be enough to meet 51 days of power demand. He added that supplies will increase as the rains subside.
Is India facing a power crisis?
The current supply tight spot cannot be classified as an outright crisis, as peak demand across the country is largely being met and coal dispatches have already increased. Elevated demand, driven significantly by groundwater pumping for paddy crops, is expected to persist through the end of this month. Furthermore, daytime electricity demand is largely met through solar power. Supply deficits primarily emerge during evening peak hours when solar output drops and thermal (coal-based) plants must step in.
India has so far been able to meet the high demand, despite instances of shortages. Even during the peak demand stretch in April-May, electricity needs were met through a diversified energy mix, including support from 20GW of gas-based power plants. Consequently, a major grid crisis is not expected going forward, though instances of load shedding may continue during this high-demand period.