In Green Europe Coal Is Displacing Natural Gas
From yesterday's WSJ:
Coal is displacing natural gas as a fuel for electricity generation in Europe.
The ripples of the North American shale boom continue to spread, as a
growing number of European utilities are forced to mothball modern
gas-fired power plants that cant compete with growing imports of cheap
coal dislodged from the U.S.
Norwegian state energy company Statkraft said Wednesday it has idled a
gas-fired power station in Germany that couldnt compete with its
coal-fired rivals, while German utility E.ON SE said it is seriously
considering mothballing more gas-fueled plants, including a
state-of-the-art facility in Slovakia.
Other European utilities have taken similar action, presenting policy
makers with a dilemmacheaper coal-fired power could provide some relief
for the regions struggling economies, but might be incompatible with
long-term goals for carbon emissions and renewable energy.
The closures across Europe are another example of the far-reaching effects
of the North American energy-supply boom. Surging supplies of natural gas
in North America, unlocked from shale rock by a new combination of
technology known as hydraulic fracturing, have prompted many U.S. power
generators to switch away from coal, pushing increasing amounts of the fuel
into Europe as cheap imports.
In 2012, U.S. exports of coal to Europe rose 23% to 66.4 million short
tons, according to data from the U.S. Energy Information Administration.
Much of this coal is displacing natural gas as a fuel for electricity
generation in Europe. In the U.K., for example, the proportion of
electricity generated from coal rose to its highest level in 17 years in
2012, while gas fell to a corresponding low.
The economic situation of our legacy business in Europe, particularly in
conventional power generation, remains difficult, said E. ON Chief
Executive Johannes Teyssen.
Gas-fired power plants are losing out to coal-fueled rivals, which are more
competitive at present electricity and commodity prices. Additionally, the
expansion of renewable energies is reducing the operating hours of gas
power plants; wind and solar energy output is generally higher at peak
demand hours, a market gas plants are designed to serve.
Companies are struggling to operate gas-fired power plants economically,
even in case of modern, state-of-the-art facilities, said IHS Energy
analyst Kash Burchett.
Coal prices for year-ahead delivery on the European Energy Exchange have
fallen nearly 19% over the past 12 months. The bulk of natural gas on
mainland Europe is priced relative to oil and in the first quarter of 2013
the average price of crude benchmark Brent fell by just 5% on the year,
according to BP data.
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