India’s Power Shortfall Hits Three-Year High as Coal Fills Hydropower Gap
India’s electricity system ran short by 560 million kilowatt-hours in September, the widest monthly shortfall since August 2023, as a weak monsoon curbed hydropower and industrial demand kept climbing, according to Reuters calculations of daily data from grid regulator Grid-India.
Total generation for the month reached 174.17 billion kWh, up 11.3% from a year earlier, but supply still failed to keep pace with demand in several states. Coal-fired plants absorbed most of the strain: coal-based generation rose 13.3% year-on-year, lifting coal’s share of India’s power mix to 66.03% in September from 64.6% in August.
Renewables grow, but lose ground in the mix
Renewable generation did not fall — it actually rose 25.1% year-on-year — but its share of total output slipped to 17% in September from 19.5% the month before, simply because coal-fired output grew even faster. The shift shows how quickly India’s grid still leans on thermal capacity when hydropower underperforms: weaker monsoon rainfall this year left reservoirs lower than usual, cutting into a generation source that normally helps balance the system during peak hours.
Coal stockpiles running thin
The reliance on coal is also straining fuel supply chains. Close to 40% of India’s coal-fired power plants were operating with critically low stockpiles in September, a vulnerability New Delhi had already flagged weeks earlier when officials began weighing mandatory imported-coal blending requirements at power stations to build a buffer against shortfalls. When domestic supply runs tight, states typically lean harder on imports or ration power to industrial users first, a pattern India has repeated in past shortfall episodes.
A tightening global coal market
The shortfall is unfolding against a global coal market the International Energy Agency expects to keep growing. In its Coal Mid-Year Update 2026, published September 10, the IEA projected global coal demand would rise 1.2% this year to a record 8.94 billion tonnes, reversing an earlier, softer outlook as the Middle East conflict curbs LNG shipments and pushes gas-dependent utilities back toward coal. India’s own coal demand is now projected to climb 4.2% this year to 1.353 billion tonnes — a sharp reversal from 2025, when India’s coal demand actually fell 1% thanks to an unusually early, strong monsoon.
That reversal underlines how exposed India’s power sector remains to weather swings from one year to the next. It also arrives as global energy markets absorb a separate shock: attacks on tankers transiting the Strait of Hormuz have unsettled seaborne fuel markets in recent days, adding cost pressure for large energy importers such as India at the same time its own grid is already stretched.
Little slack heading into the next quarter
With the summer peak-demand season now behind it, September’s shortfall suggests India’s power system has limited headroom heading into the final quarter of the year, when industrial activity typically stays elevated. Grid-India’s daily balancing figures will be the next indicator analysts watch for signs of whether coal stockpiles recover or shortfalls persist.
Sources:
- Reuters calculations of Grid-India daily data, cited in “India’s Power Shortages Jump to Three-Year High,” OilPrice.com, Oct. 1, 2026 — for September shortfall and generation-mix figures. oilprice.com
- International Energy Agency, “Coal Mid-Year Update 2026,” published Sept. 10, 2026 — for global and India coal demand projections. iea.org
Illustrative image. Photo: Biswarup Ganguly, CC BY 3.0, via Wikimedia Commons — source
