The Indian Gas Exchange (IGX) has witnessed a remarkable surge in natural gas trading, with volumes reaching 4.92 million mBtu (million British thermal units) in May 2024, reflecting a staggering 99% month-on-month increase and a remarkable 480% year-on-year growth.
This surge has primarily been fuelled by escalating demand from the power sector, propelled by hot weather conditions and governmental directives urging gas-based power plants to ramp up production to meet the escalating electricity demand.
During May, a total of 96 trades were executed, with monthly contracts comprising the maximum number of transactions, followed closely by daily and weekly contracts. The Gas Index of India (GIXI) for May 2024 stood at ₹851 or $10.2 per mBtu, marking a 13% increase from the previous month.
The power sector’s contribution to gas trading at the exchange has been steadily rising, accounting for 7% of the total share in FY24. Sources suggest that this share is poised to surpass 10% in FY25, indicating a significant shift in energy consumption patterns towards natural gas. The surge in trading volumes is a testament to the growing importance of natural gas in meeting India’s energy needs, particularly in the power generation sector. Gas-based power plants, with an installed capacity of 24.8 gigawatts, play a pivotal role, constituting around 2-3% of India’s total power generation.
Moreover, the plant load factor (PLF) of gas-based power plants soared to a four-year high of 21.4% in April 2024, reflecting increased operational efficiency and capacity utilization. The PLF for May 2024 is eagerly awaited, with expectations of continued robust performance. Looking ahead, the International Energy Agency projects a 7% year-on-year growth in India’s gas demand for the 2024 calendar year, driven in part by higher consumption for power generation. This underscores the critical role of natural gas in India’s energy transition and the need for continued investment and infrastructure development to meet the burgeoning energy needs of the nation.
