- Captive plants of 50 MW and above ordered to operate at maximum capacity
- Surplus electricity to be offered on exchanges after meeting captive requirements
India’s Ministry of Power has directed 112 captive coal-based generating stations to maximise electricity generation from 1 October to 31 December 2026, as the government prepares for continued pressure on the power system during the final quarter of the year.
The directions were issued on 25 September under Section 11 of the Electricity Act, 2003, which allows the central government to regulate the operation of generating stations under extraordinary circumstances.
According to the official order, captive coal-based generating stations with installed capacity of 50 MW and above must operate and generate electricity to the maximum extent of their available capacity. After meeting their own industrial requirements, generators must offer the available surplus electricity through power exchanges.
The generators must submit weekly reports to the Central Electricity Authority detailing:
- Electricity generation;
- Captive consumption;
- Power sold through exchanges or other permitted avenues;
- Available generating capacity; and
- Coal stocks.
The order states that adequate coal inventories must be maintained to ensure fuel availability and enable maximum generation.
Directive follows elevated September demand
The Ministry of Power said the measure was necessary because of the prevailing demand-supply situation and the expected increase in electricity demand over the coming months.
Official Ministry data show that weekly peak demand reached approximately 263,520 MW in September 2026, an unusually elevated level for the monsoon period.
Electricity requirements would ordinarily begin moderating during this period as temperatures decline and monsoon rainfall reduces cooling and irrigation demand. However, elevated temperatures, uneven rainfall and greater agricultural electricity consumption have kept demand high.
Coal-fired generation has consequently remained important, particularly during evening and non-solar hours when solar output falls and electricity demand remains elevated.
Order covers major industrial consumers
The annexure to the official order lists 112 captive generating stations associated with companies across the steel, aluminium, cement, refining, fertiliser, chemicals, paper and sugar industries.
The listed facilities include captive plants operated by:
- Tata Steel
- Vedanta
- Hindalco Industries
- JSW Steel;
- UltraTech Cement
- Reliance Industries
- Indian Oil
- SAIL
- NALCO
- Bharat Aluminium
- Hindustan Zinc
- ArcelorMittal Nippon Steel India
- Jindal Steel
- Jindal Stainless
- Several cement, paper, ferro-alloy and sugar producers.
These plants primarily supply electricity to their associated industrial operations. The amount of incremental power reaching the grid will therefore depend on the difference between each plant’s available generation and its captive consumption.
Coal supply will determine incremental generation
Although the direction requires maximum generation, the order refers specifically to maximum available capacity, rather than installed capacity. Actual output will depend on unit availability, maintenance, captive industrial demand and access to coal.
Captive generators source coal through a combination of captive mines, long-term linkages, domestic auctions, commercial suppliers and imports. Plants with secure captive coal production or fuel linkages should be better positioned to increase output.
Plants dependent on auction coal or market purchases may need to compete more actively for domestic supplies during October-December.
BigMint analysis indicates that the direction could have the following implications:
- Higher coal consumption by captive power producers
- Stronger demand in domestic coal auctions
- Additional pressure on railway and road logistics
- Greater demand for imported coal among coastal industrial plants
- Reduced availability for smaller non-power consumers
- Increased electricity supply through exchanges where captive plants have surplus generation
The precise coal requirement cannot be calculated without the aggregate available capacity, operating load and existing captive consumption of the 112 plants.
Exchange supply may improve, but captive demand comes first
The directive does not require captive generators to divert electricity away from their associated industrial units. Captive consumption retains priority, with only the remaining surplus required to be offered through power exchanges.
The potential increase in exchange supply will therefore vary considerably between plants. Energy-intensive operations such as aluminium smelting, steelmaking, cement production and petroleum refining typically consume most of their captive generation.
Nevertheless, even a modest increase in surplus supply could help the grid during evening peaks, unexpected unit outages or periods of reduced renewable generation.
Weekly reporting to the CEA will provide the government with visibility over how much captive capacity is available, how much is consumed internally and how much reaches the wider market.
Imported-coal capacity also being mobilised
The captive-generation directive forms part of a wider effort to maximise thermal power availability.
The Ministry of Power has separately extended its Section 11 direction requiring Coastal Gujarat Power Ltd.’s imported-coal-based Mundra generating station to operate and supply electricity in accordance with government instructions. The extension also runs through the period of elevated demand.
The combined measures indicate that the government is seeking to mobilise utility, captive and imported-coal-based generation rather than relying exclusively on domestic coal-fired utility stations.
Outlook
The immediate objective is to improve electricity availability during October-December by drawing additional generation from capacity that normally serves industrial consumers.
The effectiveness of the measure will ultimately depend on coal availability. If captive plants are to operate at higher utilisation while utility generators simultaneously rebuild depleted inventories, competition for fuel and transport capacity could intensify.
For the coal market, the directive points towards stronger captive-sector demand during the December quarter. For the power market, it could provide additional exchange supply and help manage evening and peak-hour requirements.
However, the order is unlikely to unlock the entire installed capacity of the 112 plants for the grid. Industrial consumption will continue to receive priority, making the availability of surplus electricity — and not headline capacity — the key figure to monitor.
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