India Bets on Regional Power Trade as LNG Disruption Strains Asian Grids
The ADB has pledged $50bn for Asia's cross-border grid by 2035 as former Indian power secretary Alok Kumar argues interconnection beats battery storage for managing renewable variability.
The Asian Development Bank committed in mid-June to mobilize $50 billion for a regional power grid across Asia by 2035, with the bank providing half the financing. The pledge, announced by ADB President Masato Kanda at a forum calling for greater regional energy cooperation, reflects a judgment among multilateral lenders that isolated national grids cannot absorb the combined pressure of renewable intermittency and a structurally disrupted LNG market.7
Spot LNG prices have roughly doubled since the Iran conflict damaged Qatar's main export facility, which under normal conditions handles 17 percent of global LNG flows. JKM Asian LNG stood at $15.52 per million British thermal units on June 29, elevated even as prices have pulled back from the March 2026 peak above $25 per million British thermal units cited at the height of the disruption.5,3
For India, that supply shock arrives as pressure in the power sector is building. Renewables now dominate new capacity additions, but their variability is placing new demands on grid managers who lack the cross-border balancing options available to European utilities. Alok Kumar, who served as India's power secretary, argued in an interview published on June 3 that regional electricity trade is a cheaper and more effective solution to the variability problem than accelerating domestic battery storage buildout.6
The case has precedent. European markets rely on cross-border flows, Norwegian hydro into Germany during wind lulls and French nuclear into Britain during cold snaps, to smooth renewable variability at lower cost than any single-country storage program could achieve. India's grid connectivity with Bangladesh remains limited. The broader Southeast Asian corridor is largely disconnected.6
What the LNG crisis has exposed is how quickly coal reasserts as the fallback when gas supply tightens. Asia's major LNG importers are burning more coal. Newcastle thermal coal stood at $113.35 per tonne on June 29. Global coal power capacity stood at approximately 2,100 gigawatts as of 2024, declining only slowly as retirements in advanced economies are partially offset by new construction in South and Southeast Asia.4,1
India's oil sector has taken a parallel hit. The Mangalore MRPL refinery, which accounts for six percent of India's crude-processing capacity, shut one of its three units following disruption to Middle Eastern crude flows. Across the region, refineries are cutting throughput by ten percent or more, according to Kpler. Countries holding 50 days or less of crude in reserve, a category that includes Singapore and South Korea, have ordered major refiners to suspend fuel exports.3
The ADB's financing commitment targets exactly this structural gap. Kanda's $50 billion envelope, if contracted, would fund subsea interconnectors and cross-border grid links giving markets such as India and Bangladesh access to dispatchable hydro capacity from the Himalayan foothills and the Mekong basin. That is the Asian equivalent of Nordic hydropower underpinning German renewables, and it would reduce the coal and LNG fallback that India currently has little alternative to using.7
India's newly concluded free trade agreement with the European Union adds a secondary dimension. At roughly 76 billion euros in annual EU exports, the deal accounts for 0.4 percent of EU GDP. Tariffs on European cars entering India will fall from 110 percent to 10 percent gradually under quota. For energy infrastructure, the deal opens a lower-cost channel for clean energy hardware including inverters, electrolyzers, and grid management equipment as India expands its renewable fleet.2
But the binding near-term constraint is that JKM at $15.52 keeps gas-fired generation economically subordinate to coal for baseload dispatch across India and Southeast Asia. Until Qatar's export capacity returns or alternative supply routes mature, Asian power systems will remain caught between expensive gas, resurgent coal, and renewable variability that no single market can absorb alone. Whether India formally commits to the Bangladesh interconnect and the broader Southeast Asian grid initiative in the months ahead will indicate whether the ADB's June pledge finds a political architecture to build around.3,5,7