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 India's coal-fired power output fell for a second straight month in September on an annual basis due to slower growth in electricity use and a surge in solar generation, a Reuters review of data from the federal grid regulator showed.

The decline reflects a shift in fuel use patterns in the world's fastest growing major economy and third-largest greenhouse gas emitter. It follows 47 straight months of year-over-year growth in coal use for power generation.

Electricity use in India has been rising since the pandemic due to a surging economy as well as heatwaves. However, higher rainfall during this year's monsoon reduced air-conditioning demand and weighed on power consumption, analysts say.

Total power generated from plants running on coal and lignite fell 5.8% annually in September and 4.9% in August, data from state-run Grid-India showed, compared with a 10% growth during the first seven months of the year.

Slowing growth in overall power demand, which grew 1.1% year-over-year during the September quarter compared with a 9.7% increase during the first half of the year, has helped the country reduce coal use.

Heavy September rainfall in the west and north resulted in lower power demand, CRISIL, a unit of ratings agency S&P, said in a recent note.

Meanwhile, higher installations boosted solar power generation up by 26.4% annually in September - the highest rate of growth in 12 months - pushing the share of renewable energy in India's electricity output to a record high of 13.9% during the quarter.

Higher rainfall in key states also helped cut the share of coal-fired power during the quarter to the lowest in two years, as it helped hydropower generation grow more than 26% in September from the same month a year ago.

An 18.5% rise in nuclear power generation during the quarter was also among the factors that helped reduce dependence on coal to 67.2% of total generation, the Grid-India data showed.

Lower coal dependence weighed on imports of the fuel, which fell 6.1% in September, the steepest rate of decline in 12 months, data from consultancy Bigmint showed.

Coal production and supply during the September quarter by state-run Coal India, the world's largest coal miner which accounts for nearly 80% of the country's domestic output, fell at the fastest rate since the June 2020 quarter, data on its website showed.

Still, industry officials expect economic growth to lift power demand. Fitch analysts expect power demand to grow 8% in 2024, compared with a gain of 6.5% in 2023, mainly driven by industrial growth and overall economic activity.