Coal-fired generation in Europe becomes profitable again as surging natural gas prices and constrained LNG shipments from the Strait of Hormuz force a return to conventional power sources.
Natural gas prices are experiencing significant upward pressure due to a global LNG supply crunch and persistent logistical bottlenecks in the Strait of Hormuz. As winter approaches, the reliance on gas for grid stability amid these supply constraints has pushed prices to their highest levels since the 2022-2023 energy crisis.
Prices are rising due to a combination of a global LNG supply crunch and significant shipping disruptions in the Strait of Hormuz.
The surge in natural gas prices has directly improved the economic viability of coal-fired power generation in Europe. With gas costs reaching multi-year highs, coal plants in Germany and Poland have returned to profitability, positioning coal as a necessary bridge for grid stability during the upcoming winter.
Coal-fired power is becoming profitable because the soaring cost of natural gas has made coal a more economical alternative for maintaining grid stability.
European coal-fired power plants are returning to profitability as natural gas prices hit their highest levels since the 2022-2023 energy crisis. Disruptions in the Strait of Hormuz have constrained global LNG supplies, forcing Germany and Poland to rely on coal to stabilize their power grids ahead of the winter season.
Coal plants are becoming profitable because the cost of natural gas has surged due to an LNG supply crunch, making coal a more cost-effective and necessary alternative for grid stability.
The primary driver is the disruption of LNG shipments moving through the Strait of Hormuz, which has tightened global supply and pushed prices higher.