BAKU, Azerbaijan, Dec.20
By Leman Zeynalova – Trend:
The EU coal rebound in power generation will be short-lived, Trend reports with reference to the International Energy Agency (IEA).
“In the European Union, declining electricity demand and historically low gas prices led thermal coal consumption to drop 85 Mt (-20%) to 340 Mt in 2020. In the summer of 2020, the variable costs of European gas-fired power plants were even lower than for Germany’s lignite-fired plants.5 In the third quarter, however, gas prices rose and gas-fired power plants moved back in the merit order to follow lignite-fired and efficient coal-fired power plants, despite higher European Union Allowance (EUA) prices. Global gas markets became tight in 2021 and gas prices jumped to historical highs,” reads the latest IEA report.
In consequence, coal-based power generation in the European Union is rebounding in 2021, even though coal and EUA prices have roughly doubled since the beginning of the year, says the agency.
“Gas and coal prices are expected to decline in 2022, making it difficult for inefficient coal-fired power plants to compete with gas. In the medium term, therefore, falling gas prices and high EUA rates will place gas-fired power plants ahead of coal-fired ones. In 2024, even the variable costs of lignite-fired power plants are expected to be higher than those of gas-fired units. Plus, coal-fired capacity will decrease as European countries implement their coal 5 In some cases, such as co-generation plants, additional revenue streams have to be considered when assessing the profitability of generation units. phaseout plans. In Germany, for example, 2.9 GW of lignite-fired and 6.7 GW of hard coal-fired capacity are scheduled to be decommissioned by 2024,” the report reads.
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