India Ramps Up Coal Usage Amid Heatwave and Iran War-Induced Energy Crunch

Bearish (-0.3)Impact: High

Published on May 4, 2026 (3 hours ago) · By Vibe Trader

India, the world's third-largest carbon dioxide emitter, is significantly increasing its coal consumption as the nation faces a dual challenge of extreme heatwaves and energy supply disruptions caused by the ongoing Iran war. These factors have led to a surge in electricity demand and have made alternative energy sources, such as liquified natural gas (LNG), less economically viable due to higher prices and supply chain vulnerabilities, particularly as about 60% of India's LNG imports pass through the Strait of Hormuz [1].

Coal-fired power generation in India rose to 164.9 average gigawatts in April 2026, up from 160.7 average gigawatts in April 2025, representing a sequential increase of 5.6 average gigawatts or 3.5%, according to S&P Global Energy data [1]. Despite India announcing in February that over 52% of its total installed power generation capacity now comes from non-fossil fuel sources, coal-fired plants still account for nearly 43% of total capacity and remain the dominant energy source, generating more than 70% of the country's power [1].

The spike in power demand is directly linked to record-breaking temperatures, with all 50 of the world's hottest cities on April 27 located in India, according to AQI data [1]. Experts from S&P Global Energy and Fitch Ratings note that gas-fired generation, which constitutes about 4% of India's installed capacity, remains 1.5 average gigawatts below 2025 levels, further underscoring coal's growing share in the energy mix [1]. If the El Niño climate effect develops, coal-fired power generation could potentially grow by 10% year over year [1].

The government has warned of continued high temperatures and heatwave conditions across large parts of the country in May, which is expected to sustain elevated power demand [1]. Beyond the power sector, industries such as cement production are also increasing their reliance on coal due to disruptions in petroleum coke supplies from the Middle East, which have pushed prices higher [1].

CONCLUSION

India's energy sector is under pressure from extreme weather and geopolitical tensions, leading to a notable increase in coal usage. With power demand expected to remain high and alternative fuels constrained by cost and supply issues, coal is set to play an even larger role in India's energy mix in the near term. This trend has significant implications for both energy markets and India's emissions trajectory.

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