Global Gas Crunch Makes Europe’s Remaining Coal Plants Profitable
The global LNG supply crunch has made Europe’s last-standing coal-fired power plants profitable this year as gas supply costs soar while the need for conventional generation to stabilize grids remains. In Germany and Poland, which host most of the remaining operational or back-up-ready coal power capacity in Europe, coal-fired generation is profitable again as winter approaches, LNG supply is…
A global LNG supply crunch has made Europe's remaining coal-fired power plants profitable this year, according to new reports. In Germany and Poland, which host the majority of the continent's remaining coal power capacity, coal-fired generation is once again profitable ahead of winter. This development comes as LNG supply is stuck at the Strait of Hormuz and gas prices soar to their highest levels since 2022-2023.
Europe had previously closed coal capacities in recent years due to climate targets. However, these remaining coal plants have now become crucial in stabilizing grids as gas-fired generation declines due to demand destruction and gas conservation. Coal demand in Europe remains in a structural decline, but the rate of decrease is expected to slow this year, according to the International Energy Agency.
Higher gas prices have reduced the expected decline in countries like Germany and Poland, where gas generation and spare coal capacity are still available. Weather-related events, such as cold spells heading into winter, could also temporarily boost coal use in Europe beyond what was initially anticipated.
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