A sustained heat wave over India since mid-spring has created a surge in natural gas-fired power generation, pushing LNG imports in May to the highest level in almost four years.
Liquified natural gas imports to India reached 2.46 million metric tons (mmt) in May, according to Kpler, as India’s gas inventories fell and buyers rushed to secure the super-chilled fuel.
Lower global spot prices in May combined with high temperatures just as India’s government triggered policies to mitigate power outages across the country, Institute for Energy Economics and Financial Analysis Analyst Purva Jain told NGI.
“Peak demand already touched a record-breaking 250 gigawatt (GW) in May 2024, when the share of gas increased to 3% in the power mix instead of the usual 2% gas power share,” Jain said.
India LNG importers bought nine spot cargoes for delivery in June, according to Kpler data. Gail India Ltd. issued two tenders for spot cargoes in July and August. One was a swap tender to sell one cargo from Sabine Pass for one cargo delivered to Dahej on Aug. 15-18, according to Kper data.
India, as well as other Asian countries, are suffering from extensive heat waves. In some parts of India’s capital, Delhi, temperatures exceeded 110 degrees this month. With the heat wave expected to continue, pressure has been mounting for Indian power generators to meet cooling demand for air conditioning and ceiling fans.
Nearly 75% of India’s power demand is met by coal, 13% from renewables, nearly 8% from hydro. and 3% from nuclear power. Gas typically represents around 2% of the power mix.
Prime Minister Narendra Modi’s administration aims to increase the share of natural gas in the power generation mix to nearly 15% by 2030.
The government launched tenders for gas supply earlier in the year to fuel natural gas-fired generation until October. It also invoked Section 11 of the 2003 Electricity Act, Jain explained, allowing the government in extraordinary circumstances to use gas-based power plants for the crunch period from April to June 2024.
“According to the government data, this has made available additional 6 GW for the months of May and June, in addition to the 10 GW which was already available earlier,” Jain told NGI.
Demand for LNG in India is forecast to increase by 19% in 2024, with imports to reach more than 28 mmt in 2025, according to ICIS. India imported 22.07 mmt last year, up from 20.02 mmt in the year-prior, based on Kpler data.
The government, as well as increasing the use of natural gas, is including renewables as an important part of the energy mix to ensure that peak demand is met. India’s energy policies currently call for a transition to rely on natural gas as a source of peak-power generation in the medium-term to back solar, wind and hydro resources.
