Coal-based power generation regains ground on renewables in Germany
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Statistics from the first seven months of 2021 show power generation from coal making up 26.16 % of total production – a rise of nearly 7 percentage points compared to January-July 2020 (19.3 %), according to data from the Ember think tank.

The share produced by wind farms in the same period declined from 27.8 % to 21.3 % and the share from solar power dipped from 10.9 % to 10.5 %.

   Power from gas receded to a lesser extent (from 15.3 % to 15.1 %) and hydropower production slipped from 3.2 % to 3.0 %.

    The same shift occurred in all 27 member-states of the European Union – with coal’s share of total generation rising from 11.9 % of the total in January-July 2020 to 14.1 % for the first seven months of this year. The share of wind power throughout the EU slipped from in 2020 to 15.7 % in 2020 to 14 % in 2021 while gas also declined from 19.4 % in 2020 to 18.2 % in 2021.

    The increase in the use of coal is linked to a great extent to the relatively cold winter and spring months during which efforts were also underway to restart German industry.

    In Germany, the winter of 2020-2021 featured temperatures only 0.4 degrees Celsius higher than the average recorded over the period 1991-2020. This past spring saw temperatures that were 1.7 degrees lower, according to the German Meteorological Service (DWD).

    And at the same time,  the IHS  Markit’s PMI Manufacturing Index hit a multi-year high, along with a 50-point rise in the manufacturing sector – after sinking to a minimum 34.4 points in April 2020, it climbed to 58.6 points in December and 65.6 points this past July.

    This, naturally, had an effect on demand for gas. In February 2020 (at the close of the winter heating season), European underground gas storage sites were filled to 60.3 % capacity – and a year later that figure stood at 36.7 % according to data from Gas Infrastructure Europe. And as a result, the process of filling capacity during the current spring-summer season took place more slowly than last year. By the end of July 2020, European gas storage facilities were full to 85.2 % capacity while at the end of July 2021, that figure was at only 56.9 %.

    The risk of gas shortages spurred both coal generation and demand for power generated by coal. By the end of 2021, the use of coal within the European Union will rise by 4 %, according to the International Energy Agency’s (IEA) Global Energy Review. And for the same reason, coal prices have risen sharply – these stood at $66 a tonne at the end of 2020, but on the main European Amsterdam-Rotterdam-Antwerp hub, futures contracts climbed to $144 a tonne as of 9th August.

    The price rises prompted an increase in the costs of power generated by coal. The cost of producing a megawatt-hour of power at coal-fired stations in Germany rose from 51.90 euros at the end of 2020 to 88.88 euros at the end of July 2021, according to Ember. By way of comparison, for solar power, this indicator at the end of June totalled 56.20 euros, for land-based wind farms, the figure stood at 45.3 euros.

    But power generation from renewable sources was not helped by weather conditions.

    The German Meteorology Service reported that the number of hours of sunlight in Germany this past spring was 4 % lower than the average recorded over the period 1991-2020.    This explains to a great extent why Germany, against a background of a rise in energy production (a 4.5 % increase from January to July 2021), witnessed such a structural shift in favour of coal-powered stations.

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