June 4, 2023

  • Much of Europe will face a tough transition from gas to coal as Russia curbs supply.
  • Germany is an exception because many of its coal-fired power plants are not permanently shut down.
  • Tight global coal markets have also made much of Europe’s transition from gas more challenging.

A European energy crisis triggered by Russia’s cuts to natural gas is forcing Germany to turn to coal to get enough energy ahead of winter.

The country saw the biggest increase in coal-fired power generation this year, up 18.2% compared with other European countries, according to Rystad Energy, underscoring an accelerated shift to alternative fuels as energy supplies are squeezed.

Austria, Netherlands and Italy There is also renewed focus on the use of coal, but the transition may not be easy in other European countries compared to Germany.

“Most countries have limited options to switch from natural gas to coal for power generation, as a large number of coal-fired power plants have been decommissioned in recent years,” Rystad Energy said in a report seen by Insider.

For example, Austria closed its last coal-fired power plant in 2020 as part of a plan to cut the use of carbon-intensive fossil fuels.

However, although Germany has closed many coal-fired power plants in recent years and plans to close all coal-fired power plants by 2030 It still has coal-fired power plants that could be rejuvenated as part of a decarbonization push.

“Some of them are on standby, so they’re not fully decommissioned or fully closed, so they can be opened [the plants] In a relatively short period of time,” said Rystad Energy analyst Fabian Rønningen.

For example, German utility giant Uniper recently announced that it would temporarily start up a mothballed coal-fired power plant in retaliation for sanctions imposed by Russia, possibly by the end of April 2023. It invaded Ukraine.

Germany is on track to have around 35 gigawatts of coal-fired power plants by the end of this year, according to Rystad Energy figures seen by Insider.

Germany still faces some obstacles.This explains Low water level on the Rhine, one of the most important rivers in Europe, used to transport goods such as coal, chemicals and grains. It fell amid a record summer heatwave, which subsequently sparked concerns from the German government about a possible coal shortage due to reduced domestic shipping along the river.

At the same time, the global coal market remains very tight, making it harder for other countries to transition to coal, Rystad said. And in July, IEA warns The squeeze on energy imports from Russia means the global thermal coal market is expected to remain “extremely tight” in the third and fourth quarters of this year.

SEB Group analyst Ole Hvalbye told Insider: “We see a very tough winter ahead. Q4-22 and Q1-23 are going to be tough and Europe may need all the other alternatives, where they can Moving forward in a storm.” .

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