European Power Producers Switch to Gas From Coal as Prices Fall
- Relatively cheaper gas prices mean generators drop coal
- Lower rainfall could also threaten coal plant deliveries again
The Kirchmoeser natural gas power plant, in Brandenburg, Germany.
Photographer: Krisztian Bocsi/BloombergThis article is for subscribers only.
Power producers in western Europe are expected to burn more gas to generate electricity, reducing the amount of coal the continent needs to keep its lights on.
The relative profitability of burning gas has increased as prices dropped, while the cost of coal has stayed relatively high. Gas plants with an efficiency of 55% — meaning that proportion of fuel is directly converted to power — are able to out-compete 40% efficient hard-coal units in some markets, according to Sabrina Kernbichler, a power analyst at S&P Global Commodity Insights.