India's Coal Power Surges as Heatwaves Boost Demand, LNG Costs Rise

India's reliance on coal for electricity generation intensified as extreme heatwaves drove power demand to record levels, while higher liquefied natural gas (LNG) prices made gas-fired power less competitive. Despite significant growth in renewable energy capacity, coal remained the dominant fuel source, according to a recent report by CNBC.

The country experienced severe heatwaves in early 2026, pushing electricity demand to unprecedented highs. To meet the surge, utilities ramped up coal-fired generation, which accounted for over 70% of the power mix during peak periods. Meanwhile, LNG prices remained elevated due to global supply constraints and strong demand from other Asian markets, making gas-fired power plants economically unviable for baseload generation.

India's renewable energy capacity has expanded rapidly, with solar and wind installations reaching new records. However, the intermittent nature of these sources and insufficient storage infrastructure limited their ability to meet peak demand during heatwaves. As a result, coal plants ran at higher capacity factors, offsetting some of the gains from renewables.

The situation underscores the challenges India faces in balancing its ambitious renewable energy targets with the immediate need for reliable, affordable power. While the government has promoted renewables through subsidies and policy support, coal remains the backbone of the grid due to its availability and lower cost compared to imported LNG.

Analysts warn that the continued reliance on coal could hinder India's progress toward its climate goals. The country has pledged to reduce carbon intensity and increase non-fossil fuel capacity to 500 GW by 2030. However, without significant investments in grid flexibility, energy storage, and domestic gas production, coal is likely to remain a key part of the energy mix for years to come.

The CNBC report highlights that costlier LNG made gas-fired power less competitive, further entrenching coal's dominance. India's gas-based power plants have been operating at low utilization rates due to high fuel costs, and many are considering switching to coal or biomass. This trend could exacerbate emissions and delay the energy transition.

In response, the government is exploring measures to boost domestic gas production and expand renewable energy integration. But near-term pressures from heatwaves and economic growth are likely to keep coal demand high. The report concludes that India's power sector is at a critical juncture, where policy decisions will shape the country's energy future and its ability to meet climate commitments.

Key Takeaways

1. India's coal power generation surged during heatwaves, driven by record electricity demand and high LNG prices that made gas-fired power uneconomical.
2. Despite rapid renewable capacity growth, coal remained dominant due to intermittency issues and insufficient storage, highlighting the challenges of integrating renewables at scale.
3. Costlier LNG and supply constraints are likely to keep coal dominant in the near term, potentially slowing India's progress toward its 2030 renewable energy and climate targets.