Coal power plants in Europe return to profitability

Rising natural gas prices and a global liquefied natural gas (LNG) supply crunch have restored profitability to Europe’s remaining coal-fired power plants. As gas costs reach levels not seen since the 2022-2023 energy crisis, coal is increasingly used to fill energy deficits and maintain electrical grid stability.

Germany and Poland, which host the majority of Europe’s remaining coal infrastructure, are seeing significant shifts. In Germany, the profitability of lignite generation reached approximately 64 euros ($72) per megawatt-hour this month, compared to zero profit during the same period last year. Analysts expect these high margins to persist through March.

While European nations have previously moved to close coal plants to meet environmental targets, the current geopolitical instability and limited gas supplies have made these facilities indispensable for grid reliability. The International Energy Agency (IEA) notes that while coal demand is in structural decline, the rate of decrease is slowing due to higher gas prices in countries like Germany and Poland.