Europe turns to coal as gas prices surge and storage levels vary

Europe is facing renewed reliance on coal power as gas prices surge due to supply disruptions in the Middle East, specifically involving LNG transit through the Strait of Hormuz. In Germany, the profitability of lignite power generation has spiked to approximately 64 euros per megawatt-hour to prevent blackouts and mitigate price volatility. While many European nations have been phasing out coal to meet climate goals, remaining plants are becoming essential for grid stability as gas production declines.

In terms of energy security, Italy is currently maintaining gas storage levels near 90% capacity. In contrast, Germany is facing lower storage levels at approximately 60%. To address this, German officials are considering new regulations that would mandate the actual filling of reserved storage capacities, a model similar to the one currently used in Italy. The state-owned energy group Uniper has expressed support for such a mandate to ensure higher storage levels ahead of the winter season.