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India Turns Back to Coal as Weak Monsoon Cuts Hydropower

Rising coal use is drawing down inventories, prompting the grid operator to seek extra fuel arrangements for gas plants in July.

Overview

  • Coal-fired generation jumped about 14% year-on-year in June to roughly 120.20 billion kWh, the highest level since November 2023 and a key driver of a 10.4% rise in total electricity output for the month.
  • Hydropower output fell sharply in June, down about 19–24% year-on-year depending on the dataset, as a strong El Niño delivered one of the driest Junes on record and kept demand for cooling and irrigation elevated.
  • India’s 223 GW thermal fleet burned more coal than was supplied in April–May, consuming 156.8 million tonnes versus 147.2 mt delivered and producing a drawdown in inventories, even as Coal India raised dispatches by 7.5% in June.
  • The federal grid regulator on June 29 asked gas-fired stations to arrange fuel for anticipated extra generation in July, reflecting lower gas output (down about 25–30% year-on-year) and a need for flexible backup during evening peak hours.
  • Renewables hit a record 19% share of the mix in June with generation up 23% year-on-year, but limited battery storage means wind and solar cannot yet replace flexible thermal capacity for night-time peaks, which may keep coal demand high near term.