Nearly half of India's domestic coal-based power plants were running on critically low fuel on 25 October1. Adani Power, reporting September-quarter results, said its imported coal costs had jumped sharply2.
Of 176 domestic coal-based (DCB) plants, which together have about 207 GW of capacity, 85 held critical stocks on 25 October, BusinessLine reported1. Seven of the country's 15 imported coal-based (ICB) plants were also critical1.
Adani Power said its landed imported coal costs rose around 50% year on year in the September quarter2. The two facts point to the same squeeze from opposite ends: plants are short of domestic fuel, and the imported substitute has become much more expensive.
Critical means a fraction of the buffer
Critical is a stock-monitoring category, not a crisis label. In the BusinessLine count, it means a plant holds less than 25% of the normative coal stock requirement. The normative requirement is around 19 to 20 days1.
Ankit Jain, vice-president and co-group head of corporate ratings at ICRA, said stocks were around six days' requirement as of 10 October, below the levels recorded over the past three years1.
The drawdown has been steady. Stocks at DCB plants fell from 35.13 million tonnes (mt) at the end of July to 26.04 mt at the end of August1. They then dropped to 18.60 mt on 1 October and 17.67 mt on 25 October1. Stocks at ICB plants slipped to 2.26 mt from 2.42 mt over the ten days to 25 October1.
The count of critical DCB plants rose to 85 on 25 October from 81 ten days earlier, and peaked at 91 on 21 October, the highest this year1. A separate CEA snapshot showed 96 of 191 coal plants with less than three days of coal on 19 October, up from 60 in mid-September5. The two counts use different thresholds: under 25% of normative stock, and under three days of coal.
Demand outran supply this year
The trigger was demand. Peak demand touched 260 GW on 5 October, the highest ever for the month, and stayed close to 250 GW until 15 October before easing to about 234 GW6. Electricity demand in the first ten days of October was 23.4% higher than a year earlier, according to Grid Controller of India data cited by ICRA1.
Coal plants absorbed most of the extra load. Their plant load factor rose to 68% in the September quarter from 62% a year earlier, and coal and lignite supplied 66% of electricity, up from 65%7. Coal-fired generation rose 13.3% in September as hydropower fell 20%5.
Supply did not keep pace. Domestic coal production fell 3.2% year on year in the first five months of FY27, largely because Coal India produced less, even as supply to power stations rose 4%, ICRA said1.
The first bottleneck is domestic
The immediate constraint is domestic output, coal quality and rail deliveries, not a shortage of ships.
A senior power ministry official said plants were receiving a record 2.6 million tonnes of coal a day, after scattered rain in mining areas disrupted deliveries, and expected supply to normalise8. For Gujarat, the coal ministry assured 10 to 11 rakes a day until November and 13 to 14 rakes a day after that9.
Quality adds to the cost. Adani Power chief executive S B Khyalia said monsoon-related deterioration in coal quality raised the coal needed per unit of electricity2. That lifted the effective fuel cost without a matching rise in tariffs2.
That distinction matters for buyers. The domestic shortage does not, by itself, explain the imported coal price; the two have separate drivers.
Imported coal is the relief valve, and it is dear
The imported alternative has become much costlier. The coal price series tracked by Trading Economics was $149.75 a tonne on 26 October, up 43.65% from a year earlier and near a three-year high10. Indonesia, the world's largest coal exporter, tightened export restrictions and shipments fell 23% in August10. The International Energy Agency expects Indonesian production to fall by more than 12 million tonnes this year10. Global coal shipments are growing again after a contraction in 2025, as LNG shortages push Asian buyers outside China and India towards coal11.
Adani Power's numbers show what that does to a generator. Fuel cost rose 41.8% to ₹10,229 crore in the September quarter from ₹7,216 crore a year earlier2.
"From the markets perspective, tariffs have to go up to some extent, including the merchant rates," Khyalia told investors on the earnings call2.
Recovery will be slow. Adani's Gujarat project has an index-linked tariff, so the higher imported coal cost will show up in tariffs after more than six months2. Its Bangladesh contract, priced off international benchmarks, passes the cost through immediately2.
What to watch
Short-term power prices have already moved. Indian Energy Exchange day-ahead prices were above ₹7 a unit in the first half of October6. Gujarat has arranged short-term purchases of 2,990 MW for October, 1,740 MW for November and 1,335 MW for December9. The Centre allocated Gujarat 1.6 GW of additional power, Tamil Nadu about 421 MW and Jammu & Kashmir 329 MW12.
Freight shows no clear coal-led rise yet. The Baltic Dry Index was 2,628 on 26 October, down 32 points on the day3. It had gained about 5.9% in the week to 23 October, mainly on capesize strength, while the panamax index, which usually carries 60,000 to 70,000 tonnes of coal or grain, fell to a two-month low of 2,109, with supramax at 1,8874. Panamax and supramax rates are where a pick-up in Indonesian or South African cargoes would show first.