19% surge in power sector gas consumption in 2023 due to heat waves

The power sector accounted for nearly 14% of India’s total natural gas consumption.

19% surge in power sector gas consumption in 2023 due to heat waves

According to the Gas Exporting Countries Forum (GECF) annual gas market report of 2024, India has become the world's third-largest energy consumer, with its consumption increasing by 15% YoY to 65 BCM in 2023, largely due to a shift from coal to gas for power generation. GECF has forecasted a 6% YoY growth in India's natural gas consumption to reach 68.9 BCM this year.

The power sector's natural gas consumption saw a 19% YoY increase to 8.8 billion cubic meters (BCM) last year, driven by the government's mandate to meet India's rising electricity demand, which is estimated to be growing at a rate of 6-7% per annum.

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“This rise in natural gas consumption reflects the country’s economic rebound and the increasing emphasis on cleaner energy sources, with the declining prices of natural gas making it more competitive,” it added.

India witnessed a 12 percent rise in its annual gas production to reach 35.1 BCM in 2023. This rise was predominantly driven by the encouraging government policies adopted to boost domestic production from existing and newly commissioned fields, GECF said.

Power sector gas consumption surged 19 percent Y-o-Y to 8.8 BCM last year emphasising natural gas’s growing importance, the GECF report said.

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In 2023, the power sector consumed nearly 14 percent of the total natural gas used by India, which is the world's fourth-largest importer of liquefied natural gas (LNG). At the end of December 2023, LNG imports accounted for almost half (47 percent) of India's total gas requirement.

Coal was the leading source of power with a 74 percent share in the power mix, followed by renewables (13 percent), hydro (9 percent), nuclear (2 percent), and gas (2 percent) in 2023. The Power Ministry of India reported that the peak power demand in September 2023 reached a record high of 240 gigawatts (GW), and they anticipate the demand to increase to 260 GW in 2024.

“Due to the heatwave during the summer period, which boosted cooling demand, the share of gas in the electricity mix grew significantly. This was the result of the introduction of an emergency directive to address an anticipated shortfall in electricity output during peak power demand in May and June,” the report said.

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