Centre orders 112 captive coal plants to run at full capacity as power demand surges

The Centre has directed 112 coal-based captive power plants to operate at their maximum available capacity for three months from October 1, invoking emergency provisions under the Electricity Act as it moves to secure additional electricity supplies amid an unusual surge in demand. The order covers captive generating stations with an installed capacity of 50 MW or more and will remain in force until December 31, 2026.

The September 25 order issued by the Ministry of Power requires the plants to maximise generation while maintaining adequate coal stocks throughout the period. After meeting the electricity requirements of their associated industrial facilities, the generators will have to offer surplus power through electricity exchanges in accordance with existing market regulations.

Emergency provision invoked

The directions have been issued under Section 11 of the Electricity Act, 2003, which allows the government to direct generating companies to operate their stations in a specified manner during extraordinary circumstances. The provision has previously been invoked to maximise generation from imported coal-based and gas-fired plants during periods of tight electricity supply.

The latest intervention is significant because it brings a large pool of captive industrial generating capacity into the government's efforts to bolster electricity availability. These plants are primarily established by industries to meet their own power requirements rather than supply the wider grid, but the government wants their entire available capacity utilised during the three-month period.

The order covers captive units associated with major companies across the steel, aluminium, cement, petroleum, fertiliser, paper and chemicals sectors. Companies with facilities on the list include Tata Steel, Vedanta, Hindalco Industries, JSW Steel, UltraTech Cement, Indian Oil Corporation and NALCO, among others.

September demand hits record

The move comes after electricity consumption remained unusually elevated in September, when demand would ordinarily begin easing after the summer months. India's peak power demand touched 269 GW on September 10, the highest level recorded for the month and only marginally below the year's peak of around 270 GW recorded in May.

The prolonged demand pressure has coincided with concerns over coal availability at thermal power stations. Nearly 40 per cent of India's coal-fired power plants were operating with critically low fuel stocks earlier this month, increasing pressure on the government to ensure that available generating capacity and coal supplies are used efficiently.

Coal remains the backbone of India's electricity system, making adequate fuel stocks critical during sustained periods of high consumption. The government has therefore asked captive generators not merely to maximise generation but also to maintain sufficient coal inventories so that shortages do not constrain their output.

Surplus power to exchanges

Under the order, captive plants must first meet their own industrial electricity requirements. Any power remaining after captive consumption will have to be offered through power exchanges or other permitted avenues, effectively making additional electricity available to the broader market.

This could help augment supplies during periods when demand strains conventional generating capacity. Industries with large captive plants — particularly aluminium, steel, cement and refining companies — collectively possess substantial generating capacity that normally remains primarily tied to their manufacturing operations.

The Ministry said maximising electricity availability required the full capacity of all sources of generation, including captive generating plants, to be utilised as far as possible. The directive is therefore intended to unlock generation that might otherwise remain unavailable to the wider electricity market.

Weekly monitoring by CEA

The Centre has also put in place a reporting mechanism to monitor compliance during the three-month period. Each of the covered generators will have to submit weekly information to the Central Electricity Authority on electricity generation, captive consumption, power sold through exchanges or other permitted routes, available capacity and coal stocks.

The reporting requirement will allow authorities to track both the output of individual plants and the amount of surplus electricity reaching the market. It will also provide regular visibility into coal availability at captive stations as the government prepares for elevated demand through the final quarter of the year.

Separately, the Power Ministry has extended an emergency direction requiring Tata Power's imported coal-based Mundra plant in Gujarat to operate at full capacity until December 31. The extension is also aimed at ensuring sufficient electricity availability amid the prevailing demand situation.

The twin measures underline the pressure created by electricity demand remaining close to summer-peak levels even after the traditional high-consumption season. With demand patterns becoming less predictable, the government is drawing on captive as well as conventional generating capacity to build a larger buffer for the grid through the end of the year.