BAKU, Azerbaijan, July 21
By Leman Zeynalova – Trend:
European gas-fired power generation’s competitive position is expected to improve in 2022, Trend reports with reference to the International Energy Agency (IEA).
“Forward curves at the end of June indicate that TTF prices are expected to average 10 percent below their 2021 levels in 2022, largely due to improving natural gas supply conditions in Europe. Carbon prices are expected to remain robust, averaging close to USD 65/tCO2eq through 2022. Imported coal prices are set to average at USD 85/ton,” reads the report released by the IEA.
In Europe, gas prices on the Title Transfer Facility (TTF) in the Netherlands rose almost three-fold in the first half of 2021 compared with the same period last year, to an average of USD 7/MBtu. Gas prices were supported by a strong, largely weather-driven demand recovery (+14 percent year-on-year) combined with lower LNG inflow (-10 percent year-on-year) and extensive maintenance work on the Norwegian continental shelf. Imported coal prices gained 67 percent year-on-year in the first half of 2021 to average USD 77/ton. The strong rebound in gas and coal prices has been accompanied by substantial growth in carbon prices, which more than doubled year-on-year to a record high of USD 55/tCO2eq by mid-April of 2021. Several key factors pushed up carbon prices. An agreement was reached in December 2020 to raise the 2030 emissions-reduction target from 40% to 55 percent. Proposals for European Union Emissions Trading System cap adjustments are expected in the EU Fit for 55 package, published in mid-2021. Additionally, more fossil fuels were burned through the 2020/21 heating season than expected due to cold temperatures.
The UK Emissions Trading Scheme opened for trading on 19 May 2021, with emissions allowances trading slightly above EU Emissions Trading System (EU ETS) levels. Coal-fired power generation grew more strongly (+20 percent year-on-year) than gas (+9 percent) in the European Union and the United Kingdom in the first half of 2021. Considering the mid-2021 forward curves of coal, carbon and gas prices, gas-fired power plants are expected to remain competitive through the second half of 2021.
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