Assessing the role of gas-based energy in meeting peak electricity demand in India

India’s peak energy demand, which government forecasts are likely to exceed 350 gigawatts (GW) by 2030, has been rising over the past few years due to increasing urbanization, increasing industrial activity and unstable weather patterns.

Since economic recovery began after the Covid-19 lockdowns, India’s demand for electricity has increased. Peak power demand reached a new record in FY 2023-24 of 240 GW. Figure 1 shows the continued growth in peak demand, which has increased by almost 150% between FY 2017-18 and FY 2023-24. The government expects it to reach 260 GW in the financial year 2024-25. For June, the government forecasts peak demand of 240 GW during the day and 235 GW in the evening. However, soaring temperatures led to peak demand reaching 240 GW in May alone.

As a result, the government is taking a number of actions in the short and medium term to prevent supply shortages from peaking, particularly over the summer period. To meet immediate peak power demand, the government is shifting planned plant maintenance to the monsoon season, accelerating capacity addition and reducing partial outages of thermal power plants. He also wants to optimize hydropower generation and has ordered power plants to deliver surplus energy to power exchanges. Increasing renewable energy penetration will also help meet peak power demand in the medium term due to the shift of peak demand to daytime. First and foremost, the government is ensuring that all available power plants are operational, including gas-fired power plants that are either underutilized or closed due to fuel constraints.

Figure 1: Peak power demand in India from 2017-18 to 2023-24

Source: Ministry of Energy

This note examines the role of gas-based energy in meeting peak energy demand in India. We found that it plays a limited role in the short term, which is likely to diminish in the medium term as energy storage options become commercially viable. Our findings are based on emerging trends in shifting peak demand hours and an analysis of the costs of using gas energy.