The European power market last year experienced a spike in coal-generated electricity for the first time in almost a decade, after several years of strategic decarbonisation, preliminary research data has revealed.
Rystad Energy said that its latest research had shown that coal-generated electricity had risen 18% from 470 terawatt-hours (TWh) in 2020 to 579 TWh in 2021 in the region. The research revealed that gas, hydro and wind power generation had dropped last year, increasing the pressure on other energy sources, including coal, to bridge the gap. Coal-fired electricity generation has been steadily declining in Europe since 2012, but affordability concerns surrounding gas, and availability concerns impacting nuclear, wind and hydro generation, could maintain coal’s momentum in 2022 and beyond.
“If, for instance, high gas prices persist or military conflict between Russia and Ukraine materialises, coal generation could jump by an additional 11% this year to 641 TWh – a return to 2018 levels – to ensure the lights stay on across the continent,” the think tank said.
Coal’s resurgence last year was triggered by other components of the continental power mix facing new challenges, including record-high gas prices and tensions between Russia and Ukraine, which has raised questions about the long-term security of gas imports through Russian-operated pipelines.
“European countries have been gradually decommissioning coal infrastructure over recent years, as the power market moves towards a greener, less carbon-heavy future. However, as the regional energy crisis shows, coal remains a critical component of the power mix, especially when the reliability of other sources of energy is called into question, and that is unlikely to change in the immediate future,” Carlos Torres Diaz, head of gas and power markets research at Rystad Energy, said.
While a military escalation in Eastern Europe would disrupt Russian gas flows, even without any supply disruption, record-high prices are already forcing buyers to explore alternatives. Gas prices in December 2021 hit €182 ($207) per megawatt-hour (MWh), a record high and a staggering 900% year-over-year increase. Despite soaring prices, European gas demand from the power sector fell only marginally in 2021, by around 3 billion cubic metres (Bcm) to 144 Bcm, as other components of the power mix faced myriad challenges.
Hydro and wind-generated power fell in 2021 for the first time, helping to support fossil-fuel dependency on the back of low wind speeds and hydro dam levels in crucial producing countries. Wind generation is projected to increase marginally in 2022, from 447 TWh to 469 TWh, but hydro generation is expected to remain low.
