India Braces for Power Crunch: Costly Gas Power Eyed as Summer Lifeline

India is bracing for an unprecedented summer, not just in terms of heat, but also in the monumental challenge of keeping its vast population and booming economy powered. As the mercury rises, so too does the national electricity demand, pushing the grid to its limits and reigniting urgent discussions about energy security.

With economic activity accelerating and heatwaves becoming a more frequent and intense reality, India's power consumption is projected to shatter previous records.

This looming crisis has forced policymakers to consider a potentially costly, yet vital, backup plan: reactivating the nation’s dormant gas-fired power plants. The catch? These plants rely heavily on imported Liquefied Natural Gas (LNG), a commodity notorious for its price volatility.

The financial implications are stark.

Generating electricity from gas-fired plants, especially with imported LNG, is estimated to cost a staggering 15-16 rupees per kilowatt-hour. This is a sharp contrast to the comparatively cheaper 4-5 rupees per kilowatt-hour produced by India's dominant coal-fired power stations. The massive disparity raises critical questions about how state utilities, already under financial strain, will absorb or pass on these significantly higher costs to consumers, potentially impacting industrial competitiveness and household budgets.

While coal remains the backbone of India's energy mix, accounting for approximately 70% of its electricity, supply chain bottlenecks and the sheer scale of demand mean it cannot shoulder the entire burden alone.

Renewable energy sources, despite ambitious growth, are not yet equipped to provide the consistent, round-the-clock base load power required, particularly during peak hours.

This isn't the first time India has explored this option. Last year, similar plans to bring gas-based capacity online faltered due to prohibitive global LNG prices.

Although international spot LNG prices have moderated somewhat from their 2022 peaks, they remain significantly elevated for India's largely price-sensitive domestic electricity market. The government, through state-run giants like NTPC, is actively exploring the feasibility of running around 4 gigawatts of gas-based capacity, a testament to the urgency of the situation.

Ultimately, India finds itself at a critical crossroads.

The decision to lean on expensive gas power underscores the complex tightrope walk between ensuring uninterrupted energy supply, maintaining economic affordability for its citizens and industries, and navigating its long-term clean energy transition goals. As summer approaches, the nation watches intently to see how this high-stakes energy gamble plays out, hoping to avoid the specter of widespread power outages.