Europe's Power Shift: Coal Fired Generation Surges Amid Soaring Gas Prices
European power generation is shifting towards coal due to soaring natural gas prices. In recent years, Europe favored burning natural gas for electricity, but now coal-fired power has become more profitable in major markets like Germany.
The surge in natural gas prices, which briefly breached 80 euros per megawatt hour this month, is the primary driver behind this shift. Coal generation margins have expanded steadily while gas-fired power sank deeper into negative territory.
Analysts project that European coal-fired power generation could increase by roughly a quarter over the next six months, accompanied by a corresponding decline in gas-fired output. However, Europe faces severe structural limits on how much additional coal capacity it can revive due to decades of energy transition policies that led to widespread decommissioning of coal plants.
Nuclear energy is emerging as a viable answer for stable and dispatchable power to reduce reliance on fossil fuel imports. The Italian Senate has approved the government plan to restart nuclear power, clearing legal hurdles for a nation that operated without active nuclear power plants for nearly four decades.