India coal-fired power output falls at fastest pace in five years in May
By Sudarshan Varadhan and Sethuraman N R
SINGAPORE (Reuters) - India's coal-fired electricity generation in May fell at the fastest pace in five years, as overall power demand declined for the first time since August and renewable energy generation rose to a record high, a Reuters analysis of government data showed.
Increased generation from less polluting power sources including hydro and nuclear also led to a decline in natural gas-fired power output, which fell at the steepest rate in nearly three years, a review of data from the federal power grid regulator Grid India showed.
The decline in demand for fossil fuels for electricity generation in India - the second largest importer of coal and the fourth biggest buyer of liquefied natural gas (LNG) - comes at a time when benchmark prices of the fuels are under pressure.
"Demand from the power sector - typically strong during peak season - remained limited. Additionally, economic headwinds have weighed on non-power industries," Indian coal trader I-Energy said in a note this week.
Asian spot LNG prices have declined more than 15% this year, while benchmark prices of thermal coal have plunged to more than 4-year lows due to weak demand from China and India - the top coal importing countries.
India's coal-fired power generation fell 9.5% in May on an annual basis to 113.3 billion kilowatt-hours (kWh), a review of data from the federal power grid regulator Grid India showed, marking the sharpest year-on-year decline since June 2020, when the COVID-19 pandemic led to a nationwide lockdown.
A sustained slowdown in demand for fossil fuels for power generation could help the world's third largest emitter of greenhouse gases slash emissions after it previously boosted its reliance on coal to power a post-pandemic economic recovery.
India has repeatedly cited lower per capita emissions compared with richer nations to defend its high coal use.
Utilities in China and India have cut dependence on coal and LNG imports this year also due to record coal stocks and slower growth in power demand.
India had forced gas-based power plants to operate last year to meet high power demand as temperatures soared.
As power demand is lower and prices are high for gas-fired power to be competitive with other sources such as solar this year, utilities will buy fewer volumes, said Prashant Vashisth, vice president at Moody's affiliate ICRA.
Total electricity generation in May fell 5.3% year-on-year to 160.4 billion kWh, the data showed, with the highest peak demand about 8% lower on-year at 231 GW, mainly due to milder temperatures, government officials said.
Peak demand - a measure of the maximum electricity requirement over any given time - reached 250 GW during a heatwave in May 2024.
Meanwhile, renewable energy output surged to a record high of 24.7 billion kWh in May, up 17.2% from a year earlier, with its share in the overall power mix rising to 15.4% - the highest since records began in 2018.
The share of coal in India's power mix dropped to 70.7% in May, down from 74.0% a year earlier and the lowest level since June 2022, according to the Grid India data.
Hydropower generation jumped 8.3% to 14.5 billion kWh, accounting for 9.0% of total generation compared to 7.9% in May 2024, the data showed.
Natural gas-fired power generation fell 46.5% annually to 2.78 billion kWh in May, the steepest decline since October 2022.
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