Indian power generation companies have quadrupled natural gas purchases from the Indian Gas Exchange over the past two months to meet surging demand for night-time cooling. The Indian Gas Exchange, the country’s largest gas trading platform, sold four point five trillion (tn) British Thermal Units to power firms from one April through 26 May, representing an almost 350 per cent increase from the same period a year earlier. The surge in purchases reflects intensified use of gas-fired plants as temperatures remained high around the clock.

Large swathes of the country have experienced blistering heat waves that pushed peak electricity demand to new highs both by day and by night. Utilities turned to gas-fired capacity to help meet demand during hot nights, but international supply pressures following the war in Iran pushed up prices and complicated procurement. Data from the Grid Controller of India indicated supply shortfalls of as much as five GW during peak night-time hours.

Natural gas still accounts for just two per cent of India’s electricity mix despite the increased purchases. The country has about 20 GW of gas-fired capacity, which is mainly held as a reserve to meet evening demand surges, and less than half of that capacity has been utilised this summer because of shortages. The limited role of gas underlines the system’s reliance on other fuels for base and peak supply.

Officials at the exchange said the entire volume sold to the power sector this season was regasified liquefied natural gas. Companies paid an average Rs 1,769 per million (mn) Btu on the bourse during the April–May period, around 64 per cent higher than a year earlier, adding to the cost pressure on utilities. Market participants therefore face a tighter combination of higher prices and constrained availability as peak night-time demand remains elevated. Policymakers and grid operators will need to balance short-term procurement against longer term capacity and fuel diversity considerations.