India explores using costly gas-fired power to meet peak demand

India is exploring the idea of using gas-fired power plants only to meet the surge of electricity demand during the peak summer months of May and June due to higher costs, an adviser to the power ministry said on Tuesday.

The share of gas in India's power generation has fallen to about 1.5% from 3% in 2020, as prices have hit $12 per million British thermal units and ranged between $8 and $18 over the last two years, meaning other forms of generation are much cheaper.

More carbon-intensive coal-fired generation typically accounts for about 75% of India's electricity mix. The country is trying to increase its use of renewable power.


Chairman of the Central Electricity Authority Ghanshyam Prasad, speaking at the Indo-American Chamber of Commerce energy summit in New Delhi on Tuesday, did not give details on how gas-fired generation would be supported.

However, he said the government had in May drawn up a 100-day plan to ensure gas-based plants could be used if needed to meet demand, and that it provided for a contract structure, including support for startup costs and gas price fluctuations.

The government also reduced the capacity of gas plants connected to the grid to 20 gigawatts from 25 gigawatts after some were found unfit to be operated following years of being idled because of high gas prices.

Of this capacity, Prasad said India deployed around 13-14 GW last year during the high-demand period.

This year's heavy rains and reduced demand for cooling, as well as economic slowdown, have curbed power demand, meaning India's need for gas generation was limited.

Power demand at its peak was 242 GW compared to the predicted 270 GW.