India has ordered more than 100 captive coal-fired power plants to operate at maximum capacity from October 1 through the end of 2026, as the government prepares for an expected increase in electricity demand and seeks to strengthen power supplies during a period of tight coal availability.
India Orders 112 Captive Power Plants to Run at Full Capacity
India’s federal power ministry has directed 112 captive coal-fired power plants with installed capacity of at least 50 megawatts to maximise generation from October 1 through December 31.
The order, dated September 25, was issued under emergency provisions of the Electricity Act. The government said the measure is intended to address an “expected rise in electricity demand in the coming months.”
Captive power plants primarily generate electricity for the industrial facilities that own or operate them. In India, these facilities include aluminium smelters, steel manufacturers, cement plants and oil refineries, which require large and relatively continuous supplies of electricity.
Under the new direction, the plants must maximise their electricity generation and make surplus power available through power exchanges. This could provide additional electricity to the wider grid at a time when the government is preparing for stronger demand.
Why India Is Preparing for Higher Power Demand
India’s electricity demand has been rising as economic activity, industrial production and weather conditions increase pressure on the power system. The latest government order specifically cites an expected rise in electricity demand during the coming months.
The situation is being complicated by unusually high temperatures associated with the El Niño climate phenomenon. Higher temperatures can increase electricity consumption as households and businesses use more cooling equipment, while industrial facilities continue to require substantial amounts of power.
The government is therefore seeking to use available generating capacity more intensively rather than allowing captive plants to operate below their maximum output.
The move also highlights the importance of coal-fired generation in India’s electricity system. Despite rapid growth in renewable energy, coal remains a major source of reliable electricity for the country’s large and expanding power demand.
Coal Stockpiles Are Already Under Pressure
The government’s decision comes as coal supplies at a significant portion of India’s coal-fired power plants remain under pressure.
Nearly 40% of coal-fired power plants are operating with critically low fuel stocks, according to the Reuters report. The situation has been linked to a surge in electricity demand, with higher-than-usual temperatures adding to pressure on the power system.
This creates a difficult balance for electricity planners. India wants captive generators to maximise output, but those generators also need sufficient coal supplies to maintain that production.
Increasing generation from captive plants could help meet immediate electricity requirements, while the government will also need to monitor fuel availability to ensure that plants can continue operating reliably.
Which Companies Are Covered by the Order?
The government order covers captive power plants operated by some of India’s largest industrial and energy companies.
The companies named in the order include Vedanta, Tata Steel, Hindalco Industries, JSW Steel, UltraTech Cement, Reliance Industries, Indian Oil, Bharat Aluminium, Hindustan Zinc and Nayara Energy.
These companies operate energy-intensive businesses where reliable electricity is essential for production. Aluminium smelting, steelmaking, cement production and refining can require large amounts of electricity, making captive generation an important part of industrial operations.
By directing these plants to maximise output, the government is effectively seeking to make more of the country’s existing generation capacity available during a period of anticipated demand growth.
Surplus Electricity Must Be Sold Through Power Exchanges
The order does not simply require captive plants to generate more electricity for their own industrial facilities. The power ministry has also directed generators to sell surplus electricity through power exchanges.
This requirement could increase the amount of electricity available to other buyers on the market.
Captive plants are generally designed to supply the industrial facilities associated with them. However, when generation exceeds the needs of those facilities, the additional electricity can be supplied to the wider electricity market.
The government’s directive therefore seeks to turn otherwise unused or additional captive generation capacity into a source of electricity for the broader power system.
Weekly Reporting Requirements Introduced
The power ministry has also introduced additional monitoring requirements under the order. The affected generators must report weekly to the Central Electricity Authority.
The reports must provide information on electricity generation, captive consumption, electricity sales, available generating capacity and coal stocks.
These reporting requirements will give authorities regular information about how much electricity the plants are producing, how much they are consuming internally and how much is being supplied to the wider market.
Coal-stock information is particularly important because fuel availability is already a concern at a significant number of coal-fired power stations.
What Section 11 of the Electricity Act Allows
The government’s latest action is based on Section 11 of India’s Electricity Act. The provision allows the government, under extraordinary circumstances, to direct electricity generators to operate their power stations according to government instructions.
The use of emergency powers gives the government a mechanism to influence generation during periods when electricity supply conditions require additional intervention.
In this case, the ministry is using the provision to require affected captive generators to maximise production for a defined period covering October, November and December.
Tata Power’s Mundra Plant Also Ordered to Continue Full Output
Separately, the power ministry has extended an earlier emergency direction requiring Tata Power’s imported coal-fired power plant at Mundra in Gujarat to operate at full capacity until December 31.
The ministry cited the electricity demand situation when extending the order.
The Mundra plant is different from the captive plants covered by the latest order because it is an imported-coal-fired facility. Nevertheless, the extension reflects the same broader government objective: keeping available generation capacity operating at high levels as electricity demand is expected to increase.
Why Captive Power Plants Matter to India’s Grid
Captive power plants play an important role in India’s industrial economy because large manufacturing and processing facilities often need dependable electricity supplies.
Industries such as aluminium, steel, cement and oil refining can be particularly sensitive to interruptions because their production processes require substantial and continuous energy inputs.
Captive generation allows companies to produce electricity for their own operations. During periods of high demand, however, surplus generation from these plants can also become a potential source of electricity for the broader market.
The government’s latest order seeks to make greater use of that potential during a period when the national power system is expected to face additional demand.
India’s Coal Dependence Remains Significant
The order also illustrates the continuing importance of coal in India’s energy mix. India has been expanding renewable energy capacity, particularly solar and wind power, but coal-fired generation remains important for meeting large-scale electricity demand.
Coal plants can provide power when electricity demand is high and renewable generation is not sufficient to meet the system’s needs. This makes coal availability a critical issue for electricity security.
The current situation demonstrates the challenge of managing a power system that is simultaneously expanding renewable capacity and continuing to depend heavily on coal for dependable generation.
El Niño and Higher Temperatures Add Pressure
Weather conditions are another factor behind the government’s preparations. The Reuters report said the El Niño climate phenomenon is contributing to higher-than-usual temperatures.
Hotter conditions can increase electricity consumption as demand for cooling rises. Air conditioners, fans and other cooling equipment can place additional pressure on electricity networks, particularly during peak periods.
When higher cooling demand coincides with strong industrial consumption, electricity providers need sufficient generating capacity and fuel supplies to maintain system reliability.
The government’s decision to maximise captive generation is therefore part of a broader effort to prepare the electricity system for potentially stronger consumption.
Potential Impact on Industrial Companies
The order could have direct implications for companies operating the affected captive plants. Maximising generation can increase the amount of electricity available to their industrial facilities, but it also requires sufficient coal supplies and plant availability.
Companies will also need to provide weekly operational information to the Central Electricity Authority and sell surplus generation through power exchanges.
For energy-intensive industries, the ability to maintain reliable electricity supplies can be important for production continuity. At the same time, higher power generation could increase operational requirements for plants that are already dealing with fuel constraints.
Government Faces a Supply-and-Fuel Balancing Challenge
India’s latest intervention highlights a key challenge facing electricity planners: having generating capacity available does not necessarily guarantee electricity production if fuel supplies are constrained.
The government is asking captive plants to operate at maximum capacity while nearly 40% of coal-fired plants are reportedly facing critically low fuel stocks. That makes monitoring coal availability especially important during the coming months.
The weekly reporting mechanism could help authorities identify changes in generation, available capacity and coal stocks more quickly. It may also provide policymakers with a clearer picture of how much surplus electricity captive plants can contribute to the wider market.
What the Order Means for India’s Power Market
The direction to sell surplus electricity through power exchanges could increase market availability during periods of strong demand.
Power exchanges provide a marketplace where electricity can be bought and sold. Additional supply from captive plants could therefore help connect industrial generation capacity with buyers elsewhere in the electricity system.
The actual impact will depend on how much surplus electricity the affected plants can generate after meeting their own industrial requirements and whether sufficient coal is available to sustain maximum output.
India’s Power Demand Outlook for the End of 2026
The latest order covers the final three months of 2026, suggesting that the government is preparing for potential pressure on electricity supplies through the end of the year.
October 1 marks the beginning of the period covered by the directive, while the order remains in force through December 31.
During this period, authorities will monitor generation levels, captive consumption, power sales, available capacity and coal inventories through the required weekly reports.
The government’s approach combines emergency regulatory powers with closer monitoring of generation and fuel supplies. It also seeks to make surplus captive electricity available to the wider market.
What Happens Next
From October 1, the 112 covered captive plants are expected to operate at maximum capacity under the government direction. Their weekly reports will provide authorities with information on whether the plants are meeting the generation requirements and how much surplus electricity is reaching power exchanges.
The government will also need to monitor coal stocks closely because fuel availability could determine how effectively the additional generation capacity can be used.
The separate extension for Tata Power’s Mundra plant keeps another large coal-fired facility operating at full capacity until December 31.
Overall, the measures show that India is preparing its electricity system for stronger demand by using existing coal-fired generation capacity more intensively. The effectiveness of the strategy will depend on demand levels, plant availability and the ability to maintain adequate coal supplies through the final months of the year.
Frequently Asked Questions
Why has India ordered captive coal plants to operate at maximum capacity?
India expects electricity demand to rise in the coming months and is using emergency provisions to maximise available generating capacity and strengthen power supplies.
How many captive power plants are covered by the order?
The order covers 112 captive coal-fired power plants with installed capacity of at least 50 megawatts.
When does the order take effect?
The plants are directed to maximise generation from October 1 through December 31, 2026.
Which industries use captive coal-fired power plants?
Captive plants primarily serve energy-intensive industries such as aluminium, steel, cement and oil refining.
Which companies are included in the government order?
The order covers plants belonging to companies including Vedanta, Tata Steel, Hindalco Industries, JSW Steel, UltraTech Cement, Reliance Industries, Indian Oil, Bharat Aluminium, Hindustan Zinc and Nayara Energy.
What must companies do with surplus electricity?
The power ministry has directed the affected generators to sell surplus electricity through power exchanges.
Why are coal supplies a concern in India?
Nearly 40% of coal-fired power plants are reportedly operating with critically low fuel stocks, while electricity demand has increased and higher temperatures are adding pressure to the power system.
What does Section 11 of the Electricity Act allow?
Section 11 allows the government, under extraordinary circumstances, to direct electricity generators to operate their power stations according to government instructions.
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