Asia’s hydro power slump puts pressure on coal as El Niño weakens rainfall, says S&P

New Delhi: Hydropower generation across key Asian markets fell sharply in June as weather-related disruptions reduced reservoir inflows, increasing reliance on coal and other flexible power sources to meet rising electricity demand.

Combined hydropower generation in Japan, South Korea, India, Bangladesh, Vietnam, the Philippines and Malaysia declined by about 13 average gigawatts (aGW) from a year earlier, according to an S&P Global Energy report released on Tuesday.

India and Vietnam accounted for most of the drop. Hydropower generation fell by 6.3 aGW in India and 4.6 aGW in Vietnam, together making up more than 80% of the regional decline.

Mint earlier reported that a weaker monsoon and the El Niño phenomenon could weigh on hydropower generation in India this fiscal.

Data from the National Power Portal showed that India’s hydro power generation fell 19.5% to 13,361.96 million units (MU) in June, down from 16,593.07 MU during the same period last year.

“The decline was widespread across Asia, indicating the emergence of a common weather-driven trend rather than isolated local factors,” the report said.

Consistent with expected impact

The June decline is consistent with the expected impact of El Niño on rainfall patterns and reservoir inflows across Asia, it said. Current El Niño-adjusted outlook assumptions continue to point to lower hydropower utilization rates than in a non-El Niño scenario across several markets during the third quarter of 2026, particularly India, Bangladesh, Vietnam and the Philippines.

“This suggests hydropower generation could remain below normal if El Niño conditions persist through the summer months. Under this scenario, the June hydro shortfall may signal the start of a broader seasonal trend, extending the need for additional thermal generation and increasing reliance on flexible fuel sources, such as LNG, to maintain supply security.”

The report said flexible generation sources will be needed to replace lost hydropower output.

Shift matters

The shift matters because hydropower is among the power system’s most flexible resources. Unlike solar and wind, it can respond quickly to swings in electricity demand and renewable generation, helping maintain grid stability during peak periods.

Coal-fired generation is likely to absorb a significant share of the shortfall in markets such as India and Vietnam, where thermal fleets remain the dominant source of flexible supply, the report said.

The hydro deficit is already being offset through a combination of fuel switching and higher renewable generation in the worst-affected markets.

In India, a 24.3 aGW year-on-year increase in power demand, together with a 6.3 aGW decline in hydropower generation and a 0.8 aGW fall in gas-fired output, was balanced by a 20.7 aGW increase in coal-fired generation. Solar and wind generation together rose by 9.4 aGW, the report noted.

India has about 52 GW of hydropower capacity, accounting for roughly 10% of its total installed power generation capacity of 520.5 GW. The decline in hydro generation comes as electricity demand continues to climb. Peak power demand reached a record 270.8 GW on 21 May, and the Central Electricity Authority has projected a peak of 272 GW this fiscal.