Europe's Utilities Switch Back to Coal as Gas Prices Soar
European utilities are shifting back to coal due to soaring gas prices, which have reached their highest level in three years. The conflict between Iran and the US has disrupted liquefied natural gas shipments through the Strait of Hormuz, driving benchmark European gas prices above €80 per megawatt hour.
This shift is particularly pronounced in Germany, Europe's largest power market and gas consumer. Coal-fired generation is expected to be near its practical limit by the fourth quarter, according to Veyt data.
Coal is now more profitable than gas for power generation due to a reversal of economic incentives that had previously pushed coal out of the electricity mix. The 'clean dark spread', which measures coal-generation profitability, has soared since the conflict began in late February.