India's Domestic Coal Takes Over as Hormuz Disruption Rewires Import-Plant Fuel Mix
India's power plants near 50% domestic coal use as LNG costs priced out gas-for-power, driving record coal burn and a 95% surge in Russian imports.
India's coal generators were running at maximum capacity by May (2026-05-19), as Strait of Hormuz disruption cut the country off from roughly 60% of its LNG import routes and drove Asian spot gas prices to levels that made gas-for-power uneconomical.2,3 With peak power demand hitting an all-time record of 257 GW and coal-fired plants covering more than 75% of that load at peak times, India was operating as if the fuel-switching optionality that had briefly emerged in 2025 no longer existed.2
The shift reverses what had been a modest structural trend. Carbon Brief analysis published on Tuesday (2026-05-19) found coal power generation in both China and India fell simultaneously in 2025 for the first time in 52 years — India's output dropping 3.0% year-on-year, or 46 terawatt-hours, as record renewable additions displaced some thermal generation.8 The war's supply shock has overwritten that trajectory.
The mechanism is direct. India imports about 60% of its LNG through the Strait of Hormuz. When the waterway effectively closed following military action, Asian LNG spot prices roughly doubled, according to reporting by EnergyNewsbeat and NPR citing industry data.6,7 At those prices, imported gas-for-power ceased to be competitive with domestic coal, regardless of contract structure.
Henning Gloystein, managing director of energy and resources at Eurasia Group, quantified the removal: almost 30 billion cubic metres of LNG was stripped from global supply chains, with more than 80% of that volume missing in the Indo-Pacific region.3 India was among the most exposed importers given its concentration of Hormuz-routed supply.
Russia has emerged as the swing supplier. Indian coal imports from Russia jumped 95% in the first quarter of the year, filling the gap left by disrupted LNG flows and curtailed gas-for-power generation.2 Newcastle thermal coal, the seaborne benchmark for Asian physical trade, held at $125.90 per tonne on Wednesday (2026-06-24) — elevated relative to pre-crisis levels, though off crisis peaks as ceasefire developments have allowed some repricing.
India's government ordered coal plants to avoid scheduled outages and run at maximum capacity.3 The administrative directive prevented blackouts but it also demonstrated the depth of the system's dependence on dispatchable thermal generation at precisely the moment when renewable additions were supposed to be shifting the mix. The orders effectively suspended maintenance cycles across the fleet.
China's position in the coal market illustrates the contrast. Its coal imports fell 9.6% in 2024 to 490 million tonnes, driven by domestic output surging and a rare decline in thermal power generation.5 By March 2025, monthly Chinese imports had fallen to 38.73 million metric tons, down from 41.38 million tons in the same month of 2024, as domestic mines ramped dispatch volumes to 11.66 million tons daily.4 China's ability to substitute domestic for imported coal gives it a cost buffer that India, more reliant on both imported LNG and imported coal, does not share to the same degree.
JKM, the Asian LNG spot benchmark, stood at $15.74 per million British thermal units on Wednesday (2026-06-24), having retreated sharply from crisis highs as ceasefire developments and Qatar's prime minister's statement — that production could return to normal within a few weeks — prompted markets to price in a supply recovery. The JKM retreat matters for India's fuel mix: if gas prices continue falling, the economic case for maintaining maximum coal burn weakens, though the physical infrastructure to restore LNG flows into Indian terminals takes time that price signals alone cannot compress.
Dinita Setyawati, senior energy analyst at Ember, warned that the pivot to coal carries environmental and public health costs that persist beyond the immediate crisis.1 Whether the disruption ultimately accelerates long-term domestic renewable investment — as some analysts argue it will — or simply normalises heavier coal dispatch, depends partly on the level at which JKM eventually settles once Hormuz transit is fully restored.
Vessel-tracking data through the Strait over the next several weeks will provide the clearest read. Sustained laden Qatari tanker passages would push JKM lower and improve India's LNG import economics. A JKM print below $14/MMBtu would shift the domestic coal versus imported gas calculus materially, though the timeline for rebuilding effective LNG import throughput after weeks of disruption extends beyond what a price recovery alone can resolve.