India is taking emergency measures to prevent electricity outages by seeking additional volumes of natural gas and expediting power plant maintenance, according to a government note seen by Reuters. The country experienced a record power demand in August due to unusually dry weather, which led to a decline in hydro and wind energy output, resulting in the widest electricity shortage in 16 months.
To mitigate this crisis, the power ministry note dated September 5th stated that states must ensure that all gas-based power plants with power purchase agreements must be brought into use during high demand days and non-solar hours. The note also emphasized the need to bring back units under forced outage as quickly as possible and expedite the commissioning of new renewable and thermal power plants.
The move to maximize the use of gas-based power plants could potentially boost demand for natural gas in India and lead to the country seeking more liquefied natural gas (LNG) cargoes on the spot market. Government data shows that India’s LNG imports have fallen for three consecutive financial years.
As part of the emergency measures, additional arrangements for gas procurement from GAIL (GAIL.NS) for running gas-based power stations during upcoming high power demand months have been planned. This could help alleviate the pressure on electricity supply.
India’s power demand has been growing rapidly after the pandemic, with strong economic growth boosting demand from factories and increased household consumption due to summer heat. Coal accounted for over 73% of India’s power generation in the year ended March 2023, while renewable energy sources made up over 11%.
However, over half of India’s gas-fired capacity is non-operational due to high LNG prices, resulting in gas-fired power’s share in overall output falling to less than 2%. The country’s heavy reliance on coal-fired generation during non-solar hours has become a concern, especially with below-average rainfall expected during the monsoon season, which could further reduce hydroelectricity output.
In conclusion, India’s steps to secure additional natural gas volumes and expedite power plant maintenance are crucial in preventing electricity outages and ensuring a reliable electricity supply. These measures could potentially boost natural gas demand and LNG imports, while also highlighting the need to diversify India’s energy mix and expand renewable energy sources to reduce reliance on coal and gas-fired power generation.
