India Requires More Natural Gas for Electricity Production

Govt. of India has instructed units to expedite maintenance work on power plants with the use of natural gas in order to increase electricity production. These directives were issued under emergency measures to prevent power cuts in a government note.

Emergency laws require power plants to run on imported coal to boost production, extending the existing regulation. Due to dry weather conditions in August, electricity demand reached record levels. Additionally, there has been a decrease in wind energy production. As a result, the country is experiencing a power shortage at its peak in 16 months.

India has witnessed a rapid increase in electricity demand since the onset of the pandemic. Factors such as rapid economic growth have led to increased industrial demand, while the heat has driven up household consumption. As of fiscal year ending March, 2023, coal’s share in India’s electricity production remained at 73% while renewable energy sources, including wind and solar, accounted for only 11% of total production.

It has been mentioned that units that were previously shut down should be restarted as soon as possible. Furthermore, states are advised to expedite the commissioning of new non renewable and thermal power plants.

This step can lead to an increased demand for natural gas and may necessitate India importing more LNG cargo than usual from the global market. Government data indicates that India’s LNG imports have been declining for the past three fiscal years.

The ministry has also announced plans to arrange for additional gas supplies in the coming months to operate gas-based power plants with increased procurement tenders.

The high cost of LNG has limited the generation of nearly 25 GW of electricity from gas-based power plants in India. The share of gas-based power plants in total production has declined from 3% in the last decade to 2% currently, primarily due to the high cost of LNG