India's coal-based electricity generation surged to its highest level since November 2023 in June, driven by prolonged heatwave conditions and weaker-than-usual monsoon rains, which fuelled a sharp rise in cooling demand, official data showed.

Total power generation in June climbed 10.4% year on year to 178.31 TWh, according to Reuters calculations based on daily figures from Grid-India. Coal-fired output rose roughly 14% from a year earlier to 120.20 TWh, marking the strongest monthly figure in over two and a half years.

The weather office recorded June as India's fifth-driest since 1901, with a strong El Nino pattern exacerbating hot and arid conditions across much of the country. The resulting surge in air-conditioning use, particularly in the evening hours when solar generation drops due to a lack of battery storage, has significantly lifted demand for thermal power.

Renewable energy sources, however, accounted for a record 19% of the power mix in June, with overall renewables output growing 23% year on year to 33.81 TWh. But hydropower generation fell sharply by 24.4% to 14 TWh, the steepest decline since February 2024, as scanty rains reduced reservoir levels. Natural-gas-based generation also dropped 30.1% from a year ago.

Despite ongoing renewable capacity additions, thermal power is expected to remain vital in meeting peak-season demand, said Ankit Jain, vice president and co-group head for corporate ratings at ICRA. He noted that coal-fired generation could increase further this fiscal year to bridge the supply gap.