India Explores Gas-Fired Power to Balance Peak Demand

India is weighing the use of gas-fired power plants to handle peak electricity demand, despite the higher costs compared to coal and renewables. Gas now makes up only 1.5% of the country’s power mix, down from 3% in 2020, while coal still accounts for about 75%. At the same time, India is pushing to scale up renewable energy as part of its clean transition.

Ghanshyam Prasad, Chairman of the Central Electricity Authority, said the government has prepared a 100-day plan that allows gas plants to step in when required, with mechanisms to cover startup costs and price fluctuations. The effective grid-connected gas capacity is now around 20 GW, of which 13–14 GW was deployed last year during high demand.

Although favorable weather and slower demand growth reduced the need for gas this year, the government sees these plants as a flexible, lower-carbon alternative to coal. Their strategic use is intended to strengthen energy security while supporting India’s broader sustainability goals.

Reactivating gas-fired capacity for peak-demand balancing is a pragmatic response to the flexibility challenges India's grid faces as renewables scale. Gas plants can ramp up and down more quickly than coal, making them useful for filling the evening peak that coincides with declining solar output. The 100-day planning framework and mechanisms to cover startup costs address the historical friction that has kept many gas plants underutilised.

However, gas remains more expensive than coal or renewables in India, and long-term reliance on it creates exposure to imported LNG price volatility. Storage - particularly battery storage at scale - represents a lower-emissions, potentially lower-cost alternative for the same grid-balancing function over time, provided the deployment pace increases materially over the next few years.

For utilities, gas-power operators, storage developers and their financiers, Cognitud's energy transition, market intelligence and climate action teams help clients evaluate gas-vs-storage economics for peak-balancing applications, structure PPAs and firming service arrangements, and prepare disclosures that reflect the transitional role of gas alongside the longer-term trajectory toward storage-integrated renewable systems.