India’s rising electricity consumption aided by growing industrial and commercial activity as well as appreciating household usage, which forced the government to restart gas-based power plants, has led to higher consumption of natural gas.
Power consumption in India, which witnessed an all-time high peak power demand met of 241 gigawatts (GW) on September 1, has grown by more than 20 per cent during August, September and October 2023.
According to the Gas Exporting Countries Forum (GECF), India’s gas consumption marked its ninth consecutive month of growth with a 24 per cent y-o-y increase, reaching 5.8 billion cubic meters (BCM) in September 2023.
It was primarily driven by power generation and refinery sectors, which registered a growth of 34 per cent and 78 per cent y-o-y respectively, it added.
“The rise coincided with the start of the festive season, typically associated with higher power demand and a surge in industrial activities following the end of the monsoon season. Notably, the Indian authorities extended the operational duration of gas-based utilities at maximum capacity to meet the rising electricity demand,” it said in its latest report.
Running gas-based power plants added to the consumption of the commodity during the first half of the current financial year.
The GECF in its March 2023 report said, “Due to the recent heatwave in India, which boosted cooling demand in the country, it is forecasted that the share of natural gas in the electricity mix will grow in the coming months. This is due to the Indian Power Ministry’s introduction of an emergency rule to address an anticipated shortfall in electricity output during peak power demand in May and June. The directive mandates that gas-fired power plants operate at full capacity during this period.”
The government directed NTPC to run 5,000 MW gas-based capacity for May-June 2023, while its subsidiary NTPC Vidyut Vyapar Nigam procured 4,000 MW gas power from other state-run plants.
The government has directed gas-based power plants to continue operations till March 2024 in anticipation of higher demand for electricity. Around 7-8 GW of gas-based capacity is operational.
This also reflects in the Petroleum Planning and Analysis Cell (PPAC) data. India’s total natural gas consumption stood at 32.6 BCM in H1 FY24, of which the power sector accounted for 15 per cent of the total share and refineries 8 per cent.
In contrast, during H1 FY22, the total consumption was 30.6 BCM, of which power’s share was 14 per cent and refineries 8 per cent.
Gas and LNG spot prices in Europe and Asia increased for the third consecutive month in October 2023. Spot prices experienced greater volatility and were influenced by higher geopolitical risks in the Middle East and resurgence of potential strikes at Australian LNG facilities.
The average TTF spot price stood at $13.4 per mBtu, reflecting a substantial 17 per cent m-o-m increase. Besides, average NEA spot LNG price experienced a 17 per cent m-o-m increase, reaching $15.3 per mBtu. Looking ahead to the upcoming winter season, it is expected that spot prices will receive support from the anticipated increased demand for heating.