Beyond the Headlines: India’s Gas Power Crisis & the Rocky Road to Energy Security 

India’s gas-fired power sector is in steep decline, its share of electricity generation collapsing from 13% to just 2% within a decade. The primary culprit is volatile global LNG prices, making gas power economically unviable compared to cheaper coal and increasingly affordable solar-plus-storage.

This price instability has rendered 31 power plants (representing 32% of gas capacity) idle, creating costly stranded assets. Further strain comes from massive government subsidies ($30 billion in 2023) shielding the fertiliser sector – India’s largest gas consumer – from true fuel costs, imposing a heavy fiscal burden. Compounding the problem, despite significant LNG import capacity, critical domestic distribution networks are underdeveloped, leaving import terminals severely underutilized.

While projections suggest future gas demand growth, its survival hinges on securing stable, affordable long-term LNG contracts and fundamental infrastructure upgrades. Crucially, gas must redefine its role away from competing directly with renewables for baseload power and instead focus on providing essential grid flexibility and peaking support.

Beyond the Headlines: India’s Gas Power Crisis & the Rocky Road to Energy Security 

India’s energy landscape is witnessing a seismic shift, leaving its once-promising gas-fired power sector struggling for breath. What was envisioned as a bridge fuel to a cleaner future has become a story of stranded assets, fiscal burdens, and fierce competition. Understanding the why and what next requires looking beyond volatile prices to see the deeper structural challenges and strategic choices India faces. 

The Crunch: From Bridge to Stranded Asset 

The statistics paint a stark picture: 

• Plummeting Share: Gas power’s contribution has collapsed from a significant 13% of electricity generation a decade ago to a mere 2% today. 

• Idle Capacity: Alarmingly, 31 gas plants – representing nearly one-third of the nation’s total gas-based capacity – sat completely idle this fiscal year, becoming “stranded assets.” 

• Price Paralysis: The core issue isn’t just high prices, but volatility. Global LNG price swings, amplified by events like the 2022 surge, make long-term planning and cost-effective power generation nearly impossible for plant operators. 

Why Gas is Losing Ground: More Than Just Price Tags 

While volatile LNG costs are the immediate trigger, the crisis stems from converging pressures: 

• The Renewable Juggernaut: Solar and wind power, coupled with rapidly falling battery storage costs, offer predictable, low-levelized costs. As Purva Jain (IEEFA) starkly notes, electricity from gas at $8/MMBtu soars to ₹17/unit, dwarfing coal (₹5-6) and even solar-plus-storage (₹6). Gas simply can’t compete on price without sustained, unrealistically low fuel costs ($5-5.7/MMBtu). 

• The Fertiliser Subsidy Albatross: The fertiliser industry, India’s largest gas consumer, is shielded from market reality by massive government subsidies – a staggering $30 billion in 2023 alone. While protecting farmers and food security, this imposes a crippling fiscal burden and distorts the true cost signals needed for efficient energy use. 

• Infrastructure Bottlenecks: As Paul Everingham (ANGEA) points out, while LNG import capacity is expanding (nearing 50 MTPA), the internal distribution network lags. Crucially, existing terminals are woefully underutilized – six out of seven operated below half capacity last year. Gas can’t flow efficiently to where it’s needed. 

The Contradiction: Projected Growth vs. Current Reality 

The International Energy Agency (IEA) projects a 60% increase in gas use by India’s power sector by 2030, targeting a 15% share in the energy mix. This optimism clashes sharply with today’s stranded plants and uncompetitive costs. What bridges this gap? 

• Affordable, Stable Supply: As Everingham suggests, a significant global LNG supply surge (US, Australia, Qatar) could improve affordability, if India secures favourable long-term contracts locking in stability. This is a massive “if” in today’s geopolitically charged energy market. 

• Infrastructure Leap: Addressing terminal underutilisation requires urgent regulatory reforms and investment in pipelines and last-mile connectivity. Gas needs a seamless highway to reach power plants and industries. 

• Reimagining Gas’s Role: Competing directly on baseload power with renewables seems increasingly futile. Gas’s future might lie in: 

• Peak Power & Grid Stability: Providing fast-ramping power to balance intermittent renewables. 

• Industrial Feedstock: Serving hard-to-abate industries where direct electrification is challenging. 

• Strategic Reserve: Acting as a backup during renewable lulls or coal supply disruptions. 

The Human Insight: Choices with Consequences 

India’s gas conundrum is a microcosm of its broader energy transition dilemma: 

• The Subsidy Trap: Protecting consumers and critical sectors like fertiliser is essential, but the $30 billion price tag highlights an unsustainable model. Can smarter, targeted support mechanisms be designed? 

• Investment Risk: Who invests in gas infrastructure or new plants when price volatility and renewable competition create such uncertainty? Stranded assets deter future investment. 

• The Speed of Change: Renewables are advancing faster than anticipated. Banking heavily on gas as a long-term transition fuel risks locking in expensive infrastructure that could become obsolete quicker than planned. Flexibility is paramount. 

• Energy Security vs. Affordability: Reliance on imported LNG inherently carries geopolitical risk. Balancing this with the need for affordable, reliable power for development is a constant tightrope walk. 

The Path Forward: Pragmatism Over Prescription 

There is no easy solution. India’s energy future demands nuanced strategies: 

• Ruthless Cost Focus: Prioritise only the most efficient gas plants, ideally located near terminals or pipelines, for grid balancing and peaking roles. Avoid new baseload gas projects. 

• Accelerate Grid & Storage: Strengthen transmission and massively scale up storage (pumped hydro, batteries) to maximise renewable integration, reducing the need for gas as a balancing tool. 

• Targeted Infrastructure: Invest strategically in pipelines connecting underutilised terminals to specific high-value industrial clusters or peaking plants, not blanket expansion. 

• Subsidy Reform: Gradually move fertiliser subsidies towards encouraging efficiency and exploring greener alternatives (green ammonia), reducing the gas demand pressure. 

• Master the Contract Game: Aggressively negotiate long-term LNG contracts that prioritise price stability and affordability, leveraging India’s growing import capacity as a bargaining chip. 

India’s gas power story isn’t just about plants shutting down; it’s a pivotal moment demanding a fundamental rethink of the fuel’s role within a rapidly evolving energy ecosystem. The choices made now – balancing affordability, security, and sustainability – will resonate for decades, shaping not just the power sector, but the nation’s economic trajectory and environmental footprint. The era of assuming gas is an automatic “transition fuel” is over; its future in India hinges on proving its unique value in a world increasingly dominated by the sun and the wind.