A raging dry spell in August has forced farmers to fire up irrigation pumps and homes to blast air-conditioners, driving power shortages far beyond last year’s levels. Data from the Grid Controller of India Ltd showed that national power deficit shot past 10 million units on 27 August, enough to power two million homes, triggering load shedding to keep India’s vast power grid stable.
The crunch is spilling into wholesale markets, where on power exchanges have spiked while dwindling coal reserves at thermal plants and reduced hydro output threaten further supply disruptions. With 55 gigawatts (GW) of thermal capacity offline due to maintenance and forced outages, grid operators are increasingly turning to planned blackouts to manage the peak evening deficit.
“High demand, primarily for agriculture in the wake of a weak monsoon, is a key reason for the instances of shortage. Daytime demand is largely met by solar power. In the evening hours, there are instances of shortages,” said an official with a power distribution utility in Uttar Pradesh on condition of anonymity.
The deficit exposes India’s vulnerability to climate shifts, as rising agricultural and domestic demand test coal reserves and hydropower reservoirs. India recorded a 16.3% rainfall deficit in August against July’s 1% surplus, prompting farmers to crank up pumps to sustain standing paddy crops, the discom official cited above said.
Last week’s energy shortage stood at 3-10 million units, compared with less than 1 million units a year ago, leading to an increase in blackouts. Load sheddings now average 2-3 hours a day, which is much higher than the norm, said a former executive with Grid Controller of India.
“Along with higher irrigation requirements, high humidity due to lower monsoon rains increases the use of air-conditioners, raising overall consumption. Last year witnessed low demand, but this year, the demand has again touched a new record,” said Pankaj Batra, former chairman of Central Electricity Authority (CEA). This year, peak power demand reached 270.8GW in May and is projected to reach 272GW.
The surge in demand can also be gauged by the fact that in the day-ahead market of the Indian Energy Exchange, buy bids in August this year totalled 12.46 million units, 59% higher than 7.84 million units during the same period last year. On the other hand, sell bids have declined 2.4% on a year-on-year basis to 13.70 million units.
In August, peak power demand touched 250GW. This also comes at a time when thermal power capacity under outage touched 55GW on 30 August.
Soaring demand has prompted to crank up production, shrinking their coal stocks to around 29 mt as of 29 August, enough to fuel just over nine days of operations. According to the latest data from the National Power Portal, a total of 46 thermal power plants with a capacity of 63.72GW, have critically low coal stocks as of 29 August. Critical level refers to less than 25% of the required stock. Furthermore, a total of 68 plants have stock for up to five days. The drop in coal demand comes despite a 7% growth in coal production last month.
The weak monsoon has also depressed hydropower generation. Data from Crisil showed that in July, India’s hydro power generation fell 14% on a year-on-year basis.
Batra noted that outages would include both planned maintenance and forced outages. “During monsoon, thermal plants usually go for maintenance as hydro generation picks up. In the case of forced outages, these are unplanned instances where there is some fault like boiler tube leakage or any other malfunction.”
Queries mailed to the ministries of power and coal remained unanswered.
M. Prasanna Kumar, former chairman and managing director of state-run coal and lignite mining company NLC India said: “Generally, during the monsoon season, coal production gets impacted and stocks reduce. This year, the higher demand has further put pressure on the stocks. Although plant stocks have declined, inventory at the coal mine end remains robust. So, the availability for the power plants will not be affected, and supplies will continue.”
Although daytime demand has been largely met by solar, with a surplus leading to power prices falling below ₹1 per unit on the exchanges, low availability in the evening hours has led to prices hitting the ₹10 market cap in the real-time platform on the exchanges. Due to higher demand, the average price in the day-ahead market on the IEX, the platform with the highest trade volumes has increased nearly 20% this month to ₹4.86 per unit from ₹4.06 in August 2025.