Coal India steps up dispatches as demand hits 256 GW

Heatwave strain puts India’s grid under pressure

State-run Coal India has asked its subsidiaries to ramp up coal supplies to power plants to avoid shortages as India’s electricity demand hit a record high after an intense heatwave, according to two sources with direct knowledge of the matter. Several regions have faced power cuts, mainly at night when renewable output is not available, as the heatwave linked to an El Nino weather pattern strained the grid. The situation has brought fuel availability and last-mile logistics back into focus, especially for coal-dependent thermal plants that continue to supply a large share of India’s electricity.

The immediate concern highlighted in official data is the coal stock position at a set of plants. The Central Electricity Authority (CEA), which advises the power ministry, showed that 21 power plants had critically low coal inventories, with stocks sufficient for less than a week’s demand. Low stocks during a demand spike can tighten operational flexibility for utilities, particularly when night-time demand rises and renewable generation is lower.

Coal India’s directive to subsidiaries

Coal India, the world’s largest coal miner, has directed its subsidiaries to maximise dispatches using all transport modes, the sources said. This includes rail links that move coal directly from mines to power plants. The instruction underlines a push to increase daily movement volumes and reduce delays that can emerge during peak-season congestion.

Coal India also said it had urged utilities to build up coal stocks in advance of peak demand, particularly those located in logistically challenging areas. That messaging indicates the company is seeking coordination not only on production and dispatch, but also on how much inventory plants hold on-site going into the hottest weeks.

Power demand hits a new peak

India ramped up coal and gas-fired power generation last week as peak demand hit a record 256.1 gigawatts (GW) over the weekend amid a heatwave, official data showed. The rise in demand has coincided with reports of power cuts in some regions, with the night-time constraint linked to the lower availability of renewable output.

Grid-India data showed India operated about 9.6 GW of gas-fired capacity and raised coal-fired generation to around 187 GW. The figures illustrate how thermal generation is being leaned on during periods of extreme weather and high demand, even as renewables have expanded over recent years.

Coal stock stress at some power plants

The latest CEA data cited in the report showed 21 power plants had critically low coal stocks, defined as inventories adequate for less than a week’s demand. Such positions can force plants to prioritise generation schedules, seek faster deliveries, or adjust operations to conserve fuel. When multiple plants in a region face similar constraints, the risk of supply disruptions increases.

Coal India’s push to maximise dispatches using all transport modes is aimed at reducing the chance that fuel constraints become the binding factor during peak demand. The rail routes that connect mines directly to power plants can be especially important when road availability is tight or when plants are located far from major coal-producing belts.

Recent generation mix shows thermal dependence

The ramp-up in coal-fired generation to around 187 GW, alongside about 9.6 GW of gas-fired capacity in operation, points to the continuing role of thermal capacity in meeting peak loads. Gas units can provide quick ramping support, but the report also notes constraints in gas availability, which can increase reliance on coal.

When renewable output is not available at night, system operators typically depend on dispatchable sources. In the current heatwave conditions, the combination of high demand and night-time renewable limitations has made the stability and readiness of thermal generation more consequential.

Inventory build-up and Coal India’s buffer claims

Coal India has separately said it is geared up to meet a potential surge in summer coal demand and dismissed concerns of domestic fuel shortages as consumption begins to rise. The company described a three-tier buffer across the supply chain: pithead stock, coal inventory at thermal power plants, and ready-to-extract in-situ reserves.

Coal India said the cumulative on-tap availability across these sources stands at around 175.5 million tonnes (MT), which it said is sufficient to meet any spike in demand from the power sector and other industries during summer months. It also said the in-situ coal exposure at mines accounting for 90% of its annual output was 60.2 MT as of mid-February, indicating material that has already been uncovered and can be extracted at short notice.

Logistics focus: rail links and “challenging areas”

The directive to maximise dispatches includes using rail links that move coal directly from mines to power plants. These routes can reduce handling steps and shorten delivery times for large consumers. Coal India’s request that utilities build stocks in advance, especially in logistically challenging areas, suggests a focus on plants that are harder to serve quickly during demand spikes.

For utilities, holding higher inventories can provide protection against transport delays and sudden load increases. But it also requires planning for yard capacity, working capital, and coordination with dispatch schedules.

Gas constraints and operating instructions to generators

The report said that, in the absence of gas, India has asked coal plants to run at maximum capacity and avoid planned outages. It also said industries have been asked to produce their own power through captive generation plants to free up supplies for households. These steps reflect a prioritisation of residential demand during periods of stress.

Coal India’s sales in March grew for the first time in six months, the company said, indicating a ramp-up in coal stocks ahead of peak summer. The report linked the broader context to a shortfall in gas supply.

Offtake trend: a softer 2025 period preceded the heatwave spike

Coal India’s offtake fell for six consecutive months after a 7.6% jump in August, boosting inventory levels at power plants as temperate weather dented India’s power demand in 2025, according to the report. That softer period helped rebuild inventories, but the current heat-driven surge is now testing how quickly supply chains can respond when demand accelerates.

The shift from lower demand conditions to record peak demand also changes the operating rhythm for both generators and fuel suppliers. When plants ramp up generation to maintain grid stability and avoid outages, daily coal consumption rises, increasing the importance of steady dispatches.

Key figures at a glance

What investors and the power sector will track next

For the power sector, the near-term focus remains on whether coal inventories at plants move away from “critical” levels as dispatches increase. Another watch point is the ability of transport networks, particularly direct rail links from mines to power stations, to sustain higher movement rates during peak demand weeks.

On the policy and operations side, instructions for coal plants to avoid planned outages and run at maximum capacity, along with the call for captive generation by industries, signal a tight balancing act aimed at protecting household supply. Further updates from the CEA, Grid-India, and Coal India on demand, generation, and stock positions will be central to understanding how the system manages the ongoing heatwave conditions.

Conclusion

Coal India’s request to its subsidiaries to maximise coal dispatches comes as India faces record electricity demand of 256.1 GW and reports of power cuts in some regions, with 21 plants flagged as having critically low coal stocks. The company has highlighted buffer availability of about 175.5 MT across the supply chain and urged utilities, especially those in logistically challenging locations, to build stocks ahead of peak demand. Near-term developments will hinge on dispatch execution, transport performance, and the evolution of peak demand during the heatwave.