NEW DELHI, Oct 3 (Reuters) - India’s electricity generation slowed in September, reflecting a decline in industrial activity and prolonged monsoon conditions that reduced cooling demand.

Power output rose 3.2% year-on-year but fell short of August’s 4% growth, marking the first monthly drop in three months, according to daily analysis of Grid India data.

The moderation coincided with a slowdown in manufacturing expansion and continued rainfall, which curbed energy consumption. Industries account for nearly half of India’s domestic power use.

Coal-fired generation, which typically contributes about three-quarters of India’s annual electricity output, declined in September compared to August.

Production and supply by the country’s largest coal miner also fell, aligning with the dip in overall power output.

Coal India’s (COAL.NS), opens new tab production in September dropped by approximately 4%, while supply declined by 1.1%, company data showed.

"Industrial demand and thermal power consumption remain subdued ... Coal power plant inventories have dipped slightly but remain adequate for near-term requirements,” said Vasudev Pamnani, director at I-Energy Natural Resources, a coal trading firm.

Despite the slowdown in thermal generation, renewable energy and hydropower continued to expand. Solar and wind output increased, supported by strong capacity additions.

India added a record 30 gigawatts of new solar and wind capacity in the first eight months of 2025 and aims to reach 500 GW of non-fossil fuel capacity by 2030.

The sustained growth in renewable energy has helped reduce India’s reliance on coal for electricity generation this year.

A 16% increase in generation from renewable sources such as solar and wind, along with a 7.4% annual rise in hydropower output, contributed to total electricity generation of 156.52 billion kilowatt hours in September, the data showed.