Indian power producers' coal imports rose 85.6% year-on-year to 5.52-million tons in August, the highest level since May 2025, as a heat wave and lower hydropower generation pushed utilities toward costly overseas supplies.

The August surge marked a third straight month of higher imports, according to local coal trader iEnergy Natural Resources. About 80% of the imports, or 4.2-million tons, came from Indonesia.

Union Minister G. Kishan Reddy said the government is tracking the situation closely.

"Power companies currently have coal stocks sufficient for about 23 days. We are continuously monitoring the situation throughout the day," Reddy said.

Domestic coal dispatch to the power sector rose by only 2.3-million tons in August, well short of the 10-million-ton increase in consumption.

"Coal consumption surged more than expected in August, while domestic supply couldn't fully keep pace, driving many plants towards imported coal. Domestic coal dispatch to the power sector rose by only 2.3 million tons in August, well short of the 10 million-ton increase in consumption," iEnergy said.

Central Electricity Authority data showed that as of 9 September 2026, 59 plants had coal stocks below 25% of required inventory or capable of generating power for less than three days, up from 45 at the end of August.

Manoj Kumar, an analyst at the Centre for Research on Energy and Clean Air, said the strain on coal-fired generation reflects multiple pressures.

"The increasing number of power plants with lower coal stocks is a concern. While clean energy, particularly solar power, is meeting much of the daytime electricity demand, insufficient battery storage and lower water reservoir levels are putting pressure on coal-fired generation. In the immediate term, India should increase coal supplies to utilities through the rail network to maintain normal stock levels," Kumar said.

The International Energy Agency said in its Coal Mid-Year Update 2026, published on 10 September, that rising electricity demand will continue to prop up coal use in India's power sector despite rapid renewable capacity expansion. The IEA projects India's coal demand to rise 4.2% year-over-year to 1,353 million tonnes in 2026, with production expected to reach a record 1,095 million tonnes.

The agency expects global coal demand to return to its historical growth trend in 2026 following a temporary decline last year, driven in part by growing cooling needs amid El Nino conditions.

Traders reported that Indonesian coal prices have risen 18% to 20% since May 2026, while South African prices jumped 19% and Russian prices climbed 14%.