Centre orders 112 captive coal plants to run at full capacity till December
When can the government tell a factory's own power plant how much electricity to make?
Published 27 September 2026. Written by Pratidin from the reports linked at the end; every fact checked by a separate review before publishing. How we work
The Union Ministry of Power has invoked Section 11 of the Electricity Act, 2003 to direct captive coal-based power plants of 50 MW and above to run at maximum available capacity from 1 October to 31 December 2026. The order, issued on 25 September, covers 112 captive generating entities. The Ministry cited the prevailing demand-supply situation and an expected rise in electricity demand in the coming months, and said all generation sources, including captive plants, must be used to the maximum possible.
Captive plants are built by industries to meet their own power needs. Those covered are in steel, aluminium, cement, petroleum, fertilisers, paper and chemicals, and include units of Tata Steel, Vedanta, Hindalco, JSW Steel, UltraTech Cement, Indian Oil and NALCO. After meeting their own demand, they must offer surplus power on power exchanges under market rules, keep adequate coal stocks, and send weekly reports on generation, consumption, sales, available capacity and coal inventory to the Central Electricity Authority. Separately, Section 11 directions to the imported-coal plant of Coastal Gujarat Power Ltd at Mundra, first issued on 22 March 2026, were extended to 31 December.
The order comes amid fuel stress: Central Electricity Authority data showed that on 19 September, 74 of about 190 monitored coal plants, nearly 40%, had critically low stocks, meaning less than 25% of their required stock. Section 11 lets the government direct a generating company to operate a station as told in extraordinary circumstances, and the Act freed captive generation from licensing. The move taps idle industrial capacity quickly, but raises questions about costs for industry, coal diversion from core users, pollution, and whether India needs more storage and flexible supply rather than repeated emergency orders.
Prelims facts
- Section 11 of the Electricity Act, 2003 allows the appropriate Government to direct a generating company, in extraordinary circumstances, to operate and maintain a generating station in accordance with its directions.
- Under the Electricity Act, 2003, a person may construct, maintain or operate a captive generating plant without a licence.
- The Central Electricity Authority is a statutory body under the Electricity Act, 2003 that advises the government on power policy and collects and publishes sector data.
Quick recall
- Which section of the Electricity Act, 2003 was invoked?
- Section 11, which allows directions to generating companies in extraordinary circumstances.
- How many captive plants are covered?
- 112 captive generating entities.
- What is the capacity threshold for the order?
- 50 MW and above.
- For what period does the order apply?
- 1 October to 31 December 2026.
- Where must surplus power be sold?
- On power exchanges, under market regulations.
- To which body must plants report weekly?
- The Central Electricity Authority.
- Name two sectors whose captive plants are covered.
- Any two of steel, aluminium, cement, petroleum, fertilisers, paper and chemicals.
- Does a captive power plant need a licence under the Electricity Act, 2003?
- No, captive generation was freed from licensing.
Prelims practice question
Consider the following statements:
1. Section 11 of the Electricity Act, 2003 empowers the appropriate Government to direct a generating company to operate a generating station in extraordinary circumstances.
2. A captive power plant requires a generation licence under the Electricity Act, 2003.
Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Show answer
Answer: (a) 1 only. Section 11 permits directions in extraordinary circumstances. The 2003 Act delicensed generation, and captive plants can be set up without a licence, so statement 2 is wrong.
Use this in UPSC Mains: previous-year questions
Recurring theme: Energy security and the transition in India's power sector
- How to use this
Use it as a reality check: emergency orders to run coal plants flat out show how heavily peak supply still depends on coal, tempering optimism on renewable targets.
- On 25 September 2026 the Power Ministry invoked Section 11 of the Electricity Act, 2003 to make 112 captive coal plants (50 MW and above) run at maximum capacity until 31 December.
- CEA data showed that on 19 September, 74 of about 190 monitored coal plants, nearly 40%, had critically low stocks, below 25% of required stock.
- Limited battery and pumped storage means evening peaks still depend on coal; faster storage rollout is needed for renewables to displace thermal supply.
- How to use this
Use it for the implications part: thermal plants, including industrial captive units, remain the backstop for peak and non-solar demand, but face higher costs and policy uncertainty.
- The September 2026 Section 11 order makes 112 captive coal plants in steel, aluminium, cement and other industries run at maximum capacity and sell surplus on power exchanges.
- Concerns raised: higher costs and disruption for industry, coal diversion from other users, more pollution, and legal uncertainty if emergency orders become routine.
Mains practice question
Repeated use of emergency powers to keep power plants running points to structural gaps in India's electricity sector. Discuss with reference to the recent directions to captive coal plants, and suggest measures to improve supply resilience. (250 words)
Model answer
On 25 September 2026 the Ministry of Power invoked Section 11 of the Electricity Act, 2003 to direct 112 captive coal plants of 50 MW and above to run at maximum capacity from 1 October to 31 December, selling surplus power on exchanges. Similar directions to the imported-coal plant at Mundra have been extended repeatedly since March 2026.
Why the government used Section 11
- Demand pressure: the Ministry cited the demand-supply scenario and an expected rise in demand.
- Fuel stress: nearly 40% of coal plants reportedly had critically low stocks around 19 September.
- Idle capacity: captive units in steel, cement and aluminium often have spare capacity that can be tapped quickly.
Structural gaps it reveals
- Planning: demand forecasts and resource adequacy planning lag actual peaks.
- Fuel logistics: coal stocks at plants remain vulnerable to rail and mining bottlenecks.
- Storage deficit: limited battery and pumped storage means evening peaks still depend on coal.
- Market design: reliance on directions rather than price signals and capacity markets.
- Distribution company finances: weak discoms delay long-term contracts.
Concerns with emergency orders
- Higher costs and disruption for industry.
- Coal diverted from other users.
- More emissions and local pollution.
- Legal uncertainty if orders become routine.
Way forward
- Resource adequacy planning with the Central Electricity Authority's forecasts.
- Faster rollout of pumped storage and battery storage.
- Better coal logistics and minimum stock norms.
- Deeper power markets, including day-ahead and capacity products.
- Demand response and efficiency in agriculture pumping.
Section 11 is a useful safety valve, but energy security should rest on planning and markets, not recurring emergency directions.
The basics
Why this matters
Electricity shortages hit farms, factories and homes at once. By invoking Section 11 of the Electricity Act, the Centre is drafting privately owned captive coal plants into the national supply for three months. For UPSC, the story connects energy security, the legal framework of the power sector, coal logistics and the transition to renewables, all core GS3 themes. It also shows how legal tools are used when markets fall short.
What the order requires
The directions are specific. Plants must generate at maximum available capacity, first meet their own industrial needs, and then sell any surplus on power exchanges under market rules. They must keep enough coal in stock and report weekly to the Central Electricity Authority on generation, consumption, sales, available capacity and coal inventory. This turns scattered industrial power units into a temporary extra reserve for the grid.
- 1Run at maximum capacityFrom 1 October to 31 December 2026
- 2Meet own demandSupply the parent factory first
- 3Sell the surplusOffer extra power on power exchanges
- 4Stock coalMaintain adequate fuel inventory
- 5Report weeklySend data to the Central Electricity Authority
Why now
Two pressures meet. On the demand side, the Ministry expects consumption to keep rising in the coming months. On the supply side, coal stocks are thin: reports said nearly 40% of coal-fired plants were critically low around 19 September, with 74 holding less than three days of fuel. Imported-coal plants have also been kept running through repeated Section 11 orders, such as the one for Coastal Gujarat Power Ltd at Mundra, first issued in March 2026.
- 22 March 2026Directions issued to the imported-coal plant of Coastal Gujarat Power Ltd
- By June 2026Those directions extended to 30 June, then 30 September
- 25 September 2026112 captive coal plants directed to run at full capacity; Mundra directions extended to 31 December
- 1 October 2026Captive plant directions take effect
Captive power versus the grid
A captive plant exists mainly to serve its owner, like a factory's own generator. The Electricity Act, 2003 allowed such plants without a licence, which helped heavy industry secure reliable power. Grid-connected utilities, by contrast, sell to distribution companies under long-term contracts. The Section 11 order temporarily blurs this line, pulling captive capacity into the market. It also tests how far the State can steer privately owned assets in a crisis.
- Owned by an industrial user
- Mainly supplies its own factory
- No generation licence needed
- Surplus can be sold on exchanges
- Owned by a generating company
- Supplies distribution companies
- Usually under long-term contracts
- Scheduled by grid operators
The bigger question
Emergency orders solve a short-term problem but signal deeper gaps: forecasts that miss demand, coal logistics that fail under stress, too little storage to shift solar power into the evening, and markets that do not reward standby capacity. Critics also point to higher costs for industry and more emissions. Resilience needs planning and investment, not just directions. Storage, better coal logistics and markets that pay for flexibility are the durable fixes.
You now know
- The Ministry of Power invoked Section 11 of the Electricity Act, 2003 on 25 September 2026.
- 112 captive coal plants of 50 MW and above must run at maximum capacity from 1 October to 31 December.
- Surplus power must be sold on power exchanges; weekly reports go to the Central Electricity Authority.
- Around 19 September, nearly 40% of coal plants reportedly had critically low coal stocks.
Go deeper
In one line: The Centre has used emergency powers to make 112 factory-owned coal power plants run flat out for three months to shore up electricity supply.
Why it matters for UPSC
Energy security, infrastructure and the power sector's legal framework are staple GS3 topics. The story also tests how well you understand the coal-renewables balance.
The core idea
The Electricity Act 2003 lets the government issue directions to generating companies in extraordinary circumstances under Section 11. Captive Power Plants are built by industries for their own use and need no licence. With demand high and coal stocks thin, the Centre is asking these plants to generate as much as possible and sell the surplus on Power Exchanges. The Central Electricity Authority will monitor them through weekly reports. It is a quick fix that exposes longer-term gaps in planning, storage and fuel logistics.
Numbers and dates to remember
- 112 captive plants, 50 MW and above
- 1 October to 31 December 2026
- Order issued 25 September 2026
- Nearly 40% of coal plants critically low on stocks around 19 September
- Mundra imported-coal plant under Section 11 since 22 March 2026
Where to go next
- Electricity Act 2003: The law that reshaped India's power sector
- Captive Power Plants: Factories' own power stations
- Central Electricity Authority: The technical brain of the power sector
- Power Exchanges: Markets where electricity is bought and sold like a commodity
Go deeper: why emergency powers keep returning
Section 11 of the Electricity Act 2003 was designed as a rare safety valve. In 2026 it has become a recurring tool, first for imported-coal plants and now for Captive Power Plants. That pattern tells us something about the sector.
First, the fuel chain is fragile. Coal must travel long distances by rail from mines in eastern and central India, and stocks at plants fall quickly when demand spikes. Second, the grid's evening problem is growing. Solar power floods the system at noon but vanishes after sunset, so the evening peak still leans on coal unless storage fills the gap. Third, market signals are weak. Plants that could provide standby power are not paid enough to stay ready, so the government orders them to run instead.
There are costs. Industries may pay more for coal, face disrupted operations, or need to divert fuel. Local air quality can suffer. Legally, frequent use of extraordinary powers invites questions about what counts as extraordinary.
The long-term answers include better demand forecasting by the Central Electricity Authority, faster pumped hydro and battery storage, stronger coal logistics, and deeper Power Exchanges with products that reward flexibility.
Where to go next
- Electricity Act 2003: The law that reshaped India's power sector
- Captive Power Plants: Factories' own power stations
- Central Electricity Authority: The technical brain of the power sector
- Power Exchanges: Markets where electricity is bought and sold like a commodity
Electricity Act 2003
The law that reshaped India's power sector
In one line: The main law that governs how electricity is made, carried and sold in India.
What it changed
The Act replaced older electricity laws and opened the sector. Anyone meeting technical rules could build a power plant without a licence, while transmission and distribution still need licences. It set up electricity regulatory commissions at the Centre and in States to fix tariffs and settle disputes.
Emergency power
Section 11 lets the government, in extraordinary circumstances, direct a power company to run its plant in a particular way. That is the power used now to make 112 captive plants run at full capacity.
Why it matters
Almost every power sector reform since 2003 builds on this Act.
Where to go next
- Captive Power Plants: Factories' own power stations
- Central Electricity Authority: The technical brain of the power sector
Captive Power Plants
Factories' own power stations
In one line: Power stations that factories build for their own use.
Why factories build them
Steel, aluminium and cement plants use huge amounts of electricity without breaks. A power cut can damage furnaces and stop production. So many build their own plants, often coal-based, to be sure of supply.
Rules
Under the Electricity Act, 2003, a captive plant does not need a licence. It can also sell extra power to others.
Link to this story
Because many captive plants have spare capacity, the government has told 112 of them to run at full capacity until December and sell the extra electricity on power exchanges.
Where to go next
- Electricity Act 2003: The law that reshaped India's power sector
- Central Electricity Authority: The technical brain of the power sector
Central Electricity Authority
The technical brain of the power sector
In one line: The expert body that plans and watches over India's power system.
What it does
The Central Electricity Authority, set up under electricity law and now working under the Electricity Act, 2003, advises the government on power policy. It prepares national electricity plans, sets technical standards and collects data on generation, demand and fuel stocks.
Why data matters
Without accurate data, planners cannot tell when shortages are coming. That is why the new order asks captive plants to send weekly reports on generation, sales and coal stocks to the Authority.
Link to this story
The Authority will track whether the 112 plants are actually running at full capacity.
Where to go next
- Electricity Act 2003: The law that reshaped India's power sector
- Captive Power Plants: Factories' own power stations
Central Electricity Authority: every story that connects to it (2)
Power Exchanges
Markets where electricity is bought and sold like a commodity
In one line: Online markets where electricity is traded, much like a stock exchange.
How they work
Generators offer electricity, buyers such as distribution companies and large industries place bids, and a price is found for each time block of the day. The Indian Energy Exchange began trading in 2008, and exchanges are regulated by the Central Electricity Regulatory Commission.
Why they help
Exchanges let spare power reach whoever needs it quickly, without long contracts. Prices rise when power is short, signalling scarcity.
Link to this story
Captive plants must sell their surplus electricity on these exchanges, so the extra power can flow into the national grid.
Where to go next
- Electricity Act 2003: The law that reshaped India's power sector
- Captive Power Plants: Factories' own power stations
Take the 27 September 2026 quiz: 30 Prelims-style questions with answers