India's increasing usage of gas-fired power due to extreme weather and policy shifts might lead to a rise in LNG imports
India is reportedly witnessing an increase in gas-fired power usage due to intense heat and new policy measures. This might lead to a sharp rise in liquefied natural gas (LNG) imports over the next two years, as per sources cited in a report by Reuters.
Data from Grid India revealed that gas-fired power generation doubled to 8.9 billion kilowatt-hours (kWh) in April and May compared to the corresponding period in the previous year.
In 2023, over 75 per cent of India's electricity was generated from coal.
Meanwhile, gas-fired plants contributed only about 2 per cent owing to the higher cost of gas as compared to coal.
However, in May, coal's share of power generation decreased to 74 per cent from 75.2 percent in the corresponding month of the previous year. On the other hand, the share of gas nearly doubled, rising from 1.6 per cent to 3.1 per cent.
As per the report, the increased gas usage can also be attributed to an emergency clause that mandated the operation of idle gas-fired power plants to prevent power outages during the 43-day federal elections, which ended last week. Power outages have historically been a cause for concern during elections.
India's gas-fired power production is expected to increase by 10.5 per cent by March 2025, following a 35 per cent increase the previous year. To meet this growing demand, India's LNG imports surged in May to their highest levels since October 2020, even though global prices have increased five times from the low levels seen during the pandemic.
India, which is the fourth-largest importer of LNG in the world, is expected to see a 19 per cent rise in LNG demand in 2024.