The remaining coal power plants in Europe, especially in Germany and Poland, have regained profitability due to rising liquefied natural gas (LNG) prices and the need for stable electricity production. While the LNG supply crisis continues, high gas costs and increased demand for coal-fired electricity ahead of winter have made these plants a necessary option for stabilizing electricity grids.
Status of Coal Power Plants in Europe
Germany and Poland, as major hosts of coal power plants in Europe, are witnessing a return to profitability for these plants. According to estimates, the profitability of electricity generation from lignite coal in Germany has reached 64 euros (equivalent to 72 dollars) per megawatt-hour (MWh), a significant change compared to zero last year, indicating remarkable shifts in the energy market. These developments occur as gas prices have reached their highest levels since the 2022-2023 crisis.
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Demand Forecast and Future Challenges
According to the International Energy Agency (IEA), demand for coal in Europe is currently projected to be 276 million tons by 2026, down from 292 million tons last year, but this decrease is significantly less than previous forecasts. The agency noted that high gas prices have reduced expectations for demand in countries like Germany and Poland, where additional coal capacity remains available.
Weather conditions, such as cold in winter, may temporarily increase coal usage in Europe more than previously anticipated before the Iran crisis. This situation could lead to increased demand for coal and create new challenges for sustainable energy policies in Europe. Given these developments, profitability of coal power plants is expected to continue in the future, as these plants play a vital role in meeting Europe's energy needs.
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