Power sector share in coal offtake hits record low in December 2025

The power sector’s share of 77 per cent last month is the lowest in more than two years, compared to March 2025 when its share had hit a record high of 83 per cent
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PICHUMANI K

The power sector’s share in pan-India coal despatch during December 2025 hit its lowest in more than two years, accounting for just 77 per cent of the total dry fuel produced last month, compared to an average of around 80 per cent.

According to the latest data from the Coal Ministry, the share of coal supplied to the power sector, which consumes more than two-thirds of the dry fuel produced in the country, fell for the third month in a row in December.

The power sector’s share of 77 per cent last month is the lowest in more than two years, compared to March 2025 when its share had hit a record high of 83 per cent.

Overall, pan-India despatch of the dry fuel fell for the fourth consecutive month. During December, coal offtake stood at 90.17 million tonnes (mt), an annual decline of more than 2.50 per cent. During April-December 2025l, the cumulative offtake stood at 742 mt, a y-o-y fall of 1.25 per cent.

Analysts and officials attributed the decline to a drop in power demand, which is being considered an outlier as early and prolonged monsoon rains impacted power demand leading to a lower requirement for coal—the mainstay of power generation.

The coal offtake by the power sector stood at 69.55 mt last month, a y-o-y decline of almost 7 per cent. Cumulative despatch during April-December 2025 also fell by 3.79 per cent y-o-y to 588.61 mt.

Consequently, coal-based power generation also registered a negative growth of 2.23 per cent y-o-y in January 2025. However, generation rose by 5.13 per cent month-on-month as cold weather increased the requirement for heating.

As a result, India’s power demand growth in FY26 has been revised downwards. Demand also weakened during peak summers (April-June) as rains in early May 2025 cooled temperatures leading to a lower requirement for energy.

“The early and prolonged monsoon and high base effect have kept demand growth muted throughout FY26, with overall flat growth for the first seven months. Reflecting this slowdown, the full-year demand growth forecast has been revised down sharply to 1.5–2 per cent from the earlier 4–4.5 per cent, with expectations of some seasonal recovery during winter,” ICRA Co Group Head of Corporate Ratings Ankit Jain said recently.

The scenario also impacted prices on power exchanges. For instance, Indian Energy Exchange (IEX) said that increased hydropower, wind energy and sustained coal-based supply resulted in higher supply liquidity on the exchange in Q2 FY26, which led to a substantial drop in the Day Ahead Market (DAM) and Real Time Market (RTM) segments.

The Market Clearing Price (MCP) in the DAM at ₹3.22 per unit during Q3 FY26 declined 13.2 per cent y-o-y. Similarly, the MCP in RTM at ₹3.26 declined 11.6 per cent on an annual basis.

Rains not only impact power demand, but may also affect production. The International Energy Agency (IEA) expects production to remain flat in 2025, with output projected to settle at 1,089 mt, with public companies (CIL and SCCL) declining while commercial and captive blocks increase production.

In contrast, the country’s coal production rose by 7 per cent y-o-y to reach 1,082 mt in 2024, an all-time high for the country. In 2025, production stood at around 1,042.94 mt. December 2025 numbers are provisional.

Published on January 12, 2026