September 2026 was a month in which India met record-level demand by running down its coal stocks. Consumption was 162.19 billion units, up 11.35% on September 2025, according to Grid-India data reported by Business Line. Peak demand reached 269.06 GW on 10 September, close to the all-time high of 270.82 GW set in May. A year earlier the September peak was around 230 GW, so the month's peak was 17% higher.
The supply side moved the other way for hydro. JM Financial's monthly review, based on CEA and Grid-India data, puts September hydro generation at 19 BU, down 16%. Renewables produced 29 BU, up 13%. Thermal generation rose 16% to 118 BU and covered most of the increase. Coal plant load factor rose to 69% from 62%, and gas plant load factor to 27% from 17%, which is unusual given LNG prices.
The coal stock arithmetic
Plant coal stocks were 19 million tonnes at the end of September against 47 Mt a year earlier, a fall of 60%.
A stock figure means more when set against burn. By our estimate, the September thermal fleet burned around 75–80 Mt of coal.
Method: we took 118 BU of thermal generation and applied a specific coal consumption of 0.63–0.68 kg/kWh, the typical range for Indian domestic coal at the plant level in CEA performance reviews. That gives 74–80 Mt for the month, or 2.5–2.7 Mt a day. The 118 BU includes gas and lignite generation, so the true coal burn is somewhat lower; we have not netted it out, which makes the estimate conservative on days of cover. Dispatches from mines were 82 Mt in September, consistent with that order of burn.
Dividing 19 Mt by 2.5–2.7 Mt a day gives about seven to eight days of national cover. CEA's norm for pit-head plants is well below that for non-pit-head plants, so the national average hides a wide spread.
Coal production in August was 67 Mt, 4% lower than a year earlier. Monsoon months always cut mining output, and October normally sees a recovery. The question for the next six weeks is whether production recovers faster than demand falls.
Why it showed up in the evening
The evening peak deficit exceeded 7 GW during September. The cause is clear in the generation mix. Solar covers the afternoon. When it falls away, hydro is normally the flexible resource that picks up the evening ramp, and in September there was 16% less of it.
Thermal plants already running near their technical limits could not make up the gap at 7 pm. Gas plants were called more, which is reflected in the 10-point rise in their load factor. Battery storage tendered over the past two years is not yet built at a scale that changes the evening balance.
Prices and imported fuel
The exchange reflected the tightness. JM Financial puts the IEX weighted average market clearing price at Rs4.9/kWh in September, against Rs3.4 a year earlier, an increase of 44%. Real-time market volume rose 10.6% to 5,294 million units, according to IEX's own monthly update, which shows buyers covering shortfalls close to delivery.
Imported fuel has become much costlier. Indonesian 5,900 kcal coal averaged $111 a tonne in September, 47% higher than a year before. LNG delivered to India rose from about $10.8/MMBtu in February to $26 at the end of September. At those prices, imported-coal and gas plants sit at the top of the merit order and set exchange prices in the hours they run.
Capacity is still being added
Solar additions in September were 3,011 MW and wind 681 MW. For the financial year so far, solar additions of 20,791 MW are slightly behind last year's 21,686 MW. The under-construction pipeline as of June was 150 GW of renewables, 43 GW of thermal, 29 GW of hydro including pumped storage and 8 GW of nuclear.
Storage procurement continued. Maharashtra's MSEDCL awarded 2,000 MW / 4,000 MWh to 11 bidders at Rs2.38–2.40 lakh per MW per month, and SJVN awarded 265 MW / 530 MWh at Rs2.35 lakh.
Discom dues
Outstanding discom dues to generators were Rs857 billion at the end of September. The average before the late payment surcharge rules came in was Rs127 billion, so dues are now 6.7 times that level. Higher fuel costs pass through to generators faster than discoms can recover them through tariffs, and the gap is visible in the dues figure.
What to watch
The CEA daily coal stock report is the best early signal through November. If stocks keep falling while demand eases with cooler weather, the problem is production and logistics. If stocks rebuild, September was a hydro shock that the system absorbed at a high price. Grid-India's daily reports will show whether evening shortages recur in October, when hydro typically declines further after the monsoon.