In India, August 2023 marked the driest August in a century, leading to exceptionally hot weather and a surge in power demand. To address potential coal shortages and ensure the smooth operation of power plants, the central government has directed domestic coal-based (DCB) power generating companies (gencos) to blend 4% imported coal until March 2024. This directive follows a previous order in January, where gencos were instructed to blend 6% imported coal until September to meet high demand during the summer season. The power ministry's notification cited Grid India's projections of increased power demand throughout FY24 as the basis for this decision.

The mandate for blending imported coal aims to maintain sufficient coal stocks at power plants to prevent disruptions in power generation. The ministry's letter to gencos noted that despite an increase in domestic coal supply during the first quarter of FY24, it fell short of meeting the required demand. In August, there was a daily gap of approximately 200,000 tonnes between coal consumption at domestic coal-based plants and the receipt of domestic coal. Importing coal helped bridge this gap and prevented coal stocks from reaching critical levels. Additionally, the end of the monsoon season is expected to reduce hydro power supply, increasing the reliance on thermal power plants to meet electricity demand.

Power demand in India reached a record high of 239.9 GW on September 1, exceeding the Central Electricity Authority's (CEA) estimate of 230 GW for the year. However, demand has since eased, with peak demand standing at 206.441 GW on September 20. Despite fluctuations, peak demand is expected to remain manageable going forward.

Power prices on the exchanges spiked in the first four days of September, reaching the ₹10 per kilowatt-hour unit price cap. Prices have since moderated, with the market clearing price at ₹6.48, higher than the ₹4.59 per unit on the previous day. As demand continues to stabilize, power prices are expected to soften.

To meet rising power demand, the Indian government has implemented various measures. At the beginning of 2023, the Centre announced several steps to address the growing power demand. In the previous month, the power ministry instructed imported coal-based (ICB) power plants to operate at full capacity until the end of October. This extension followed an initial directive issued in February, which required ICB plants to run at full capacity until June 15, later extended to September.