Fresh data released on August 19 shows that power generation costs in a South Asian economy rose 38% year-on-year in July, with spot LNG purchase prices hitting a four-year high.

NCE platform noted that shifts in the fuel mix and growing electricity demand have jointly amplified cost pressures. When long-term supply falls short, buyers turning to the spot market face more pronounced price volatility.

NCE platform believes the substitution dynamics among LNG, fuel oil, and coal will directly influence marginal power generation costs and future procurement strategies. July's 7% year-on-year increase in power output has further highlighted the impact of elevated fuel prices.

While increased hydropower and coal-fired generation can provide some buffer, persistently high spot LNG prices could still transmit pressure through electricity tariffs, industrial costs, and trade cash flows to other sectors. Going forward, attention should be paid to the latest tender prices, inventory arrangements, and the output ratios of different energy sources.

NCE platform highlighted that until supply stability improves, generation costs will remain vulnerable to fluctuations in international fuel prices and shipping schedules.