Power plants brace for strong summer peak demand with high coal stocks

New Delhi: Stocks of domestically produced coal have touched 50.6 million tonnes at thermal power plants, showed data from the Central Electricity Authority, as power and coal companies race to meet a projected record in demand this year.

Last fiscal, the stock of domestic coal by the end of March stood at 47 million tonnes, which is now expected to reach 55 million tonnes this financial year (by 31 March 2025). With another 3.57 million tonnes of imported coal in the buffer, the overall stock at thermal plants stood at over 54 million tonnes.

Earlier, Mint reported that the Union coal ministry plans to stock up on coal with a higher opening stock of about 50 million tonnes at thermal power plants by 1 April 2026. With power plants already surpassing this target, power plants are at a comfortable situation in terms of coal stocks compared with last year.

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The 54.2 million tonnes of domestic coal stocked at 188 power plants across the country as of 26 February are enough to operate these plants for about 18 days, at an average requirement of 2.93 million tonnes per day. The total power generation capacity of these plants is 213 gigawatts (GW).

The increase in stocks comes amid steps by the government, coal producers and power generators to ensure uninterrupted availability of power following a crisis-like situation in FY22, when stocks of domestic coal were not adequate to meet the post-Covid pent-up power demand and power plants were reluctant to purchase imported coal at high prices.

In another development , the power ministry has also extended the mandate for imported coal based power plants to run on full capacity until April. Through a notification, the ministry has extended Section 11 of the Electricity Act mandating the imported coal based plants to operate as per the directives of the government amid expectations of high demand. The mandate was so far applicable till Saturday, 28 February.

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The Parliament's standing committee on coal, mines and steel few months back also noted that in FY22 the coal stock at thermal power plants fell to a low of 7.2 million tonnes, enough for only four days of coal requirements.

In its latest report submitted to Parliament in December, the panel also noted that the stocks improved to 30.54 million tonnes in 2023-24, adequate for meeting 13 days of operations.

According to the 20th Electric Power Survey, the peak electricity demand may touch 277.2GW in 2026-27 and 366.4GW by the end of financial year 2031-32. For the past three years, peak power demand has been touching new records, the latest being 250GW on 30 May this year.

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Both the coal and power ministries have ramped up efforts to ensure availability of power in view of the surging power demand. The power ministry has already planned to add 80GW of coal-based power capacity by 2032, along with an ambitious energy transition plan to install 500GW of non-fossil capacity by 2030.

Coal is expected to be the baseload for India's power sector for the few years as renewable energy, being intermittent, can destabilize the grid.

In the Economic Survey for FY24, V. Anantha Nageswaran, chief economic adviser to the government, stressed on the need to continue operations of thermal power plants while taking up other modes of managing power demand .

“There is no valid economic rationale for shutting down coal plants in India, leaving huge investments underutilized and stranded and without a dependable alternative in place. The US and European countries may transition from coal to natural gas because they have access to that resource, and their older conventional coal-based thermal plants are nearing the end of their life cycle,” Nageswaran wrote in the survey.

From FY20 to FY24, India's coal production increased at 8.07% per year from 731 million tonnes to 997 million tonnes. The ministry has a target of 1.5 million tonnes of annual production by FY30.