India’s gas-fired power generation likely muted despite temperature, heat wave forecast

India's gas-fired power generation is not expected to witness a significant surge despite a recent forecast for a hot weather summer season, market participants said.

"Gas remains the premium fuel and coal should continue to be the most economical thermal fuel," Andre Lambine, senior power analyst at S&P Global Commodity Insights, said.

Gas demand in the power sector should be close to 18 million cu m/day on average for the year, Lambine said, adding that "gas-fired power generation could decline by 15% [year over year] for 2025."

According to a statement by the India Meteorological Department, or IMD, on March 31, the country's hot weather summer season running from April to June is set to unleash above-normal maximum temperatures over most parts of the country, except some parts of the west peninsular India and isolated regions of east-central and east India.

During April-June, above-normal minimum temperatures are also likely over most parts of the country, except some isolated regions of extreme northwest India where normal minimum temperatures are likely, the IMD said on March 31.

An above-normal number of heat wave days is likely over most parts of the north and east peninsula, central India, east India, and plains of northwest India during this period. For April, an above-normal number of heat wave days is likely over most parts of east and central India adjoining peninsular India.

Power sector demand

In 2024, special government incentives were announced to boost gas-fired power generation, but for 2025 there is no such incentive announced yet. This year, India's heat waves are not expected to push up gas-based power generation and LNG demand significantly sources said.

Market participants also told Platts, part of Commodity Insights, recently that LNG consumption to meet summer demand is expected to be muted in April-June because of higher coal stocks and elevated LNG prices.

Thermal coal stocks at Indian power plants were at 55.942 million mt, sufficient for over 18 days of coal burn as of March 21, a multimonth high compared with 34.6 million mt -- the four-year average coal stocks at power plants during the same period, according to data by Central Electricity Authority.

For gas to become competitive with coal for power generation, LNG pricing needs to fall within the $6-$8/MMBtu range, an industry source said.

Another source noted that when demand emerged, "[the] government could still ask for gas to be burned" and the price may not matter that much. However, no such demand had materialized yet.

Platts assessed the May JKM, the benchmark price for LNG cargoes delivered to Northeast Asia, at $12.618/MMBtu on April 1, down 20.1 cents/MMBtu from the previous session.

The West India marker, which reflects the price for LNG delivered to India and the Middle East, was assessed at $12.313/MMBtu on April 1, at a discount of 30.5 cents/MMBtu to the May JKM assessment, Platts data showed.

The drawdown in European gas inventories in 2025 was greater than the last two years. With limited increment in supply until the October-December quarter, Europe and Asia would be competing for cargoes to fill inventories, sources said.

Competition for cargoes is also expected to be aggravated as it coincides with peak summer demand in Southeast and South Asia, the sources added.

A Singapore-based trader noted that there will be some demand still for gas-fired generation because the country will still have to fulfill peak demand management. However, generation from renewable energy resources will continue to be sizable amid an increase in capacity, he said.

India's Ministry of New and Renewable Energy, or MRNE, said April 1 that the country had added 25 GW of renewable energy capacity in the fiscal year 2024-25 (April-March), marking an increase of 35% year over year. Of this, India's solar power sector led the renewable energy growth, with capacity additions rising 38% to 21 GW.