European Analysts Project 25% Rise in Coal-Fired Power Generation

European analysts project coal-fired generation will increase 25% over the next six months as high gas prices improve coal’s economics, though Germany’s remaining fleet has little room to raise output.

European benchmark gas prices topped €80 per megawatt-hour in September, their highest level in three years. Coal and lignite plants were more profitable on average than gas-fired plants for the first time since at least 2024.

The projected increase in coal-fired generation would offset a similar decline in gas-fired output. The forecast is not a report of an increase already underway.

Germany’s coal generation is expected to approach the practical limit of its remaining fleet in the fourth quarter of 2026. Plant availability is limiting nearly all spare capacity, constraining how much the fleet can respond to the changed economics.

Coal is forecast to remain cheaper than gas for power generation through 2027 and potentially until March 2028. That outlook extends beyond the coming winter but remains a projection.

Coal accounted for 9.2% of the European Union’s gross electricity production in 2025, its lowest share on record. Hard coal made up 3.7% and brown coal 5.5%. Coal represented more than one-third of EU electricity production in 1990.

Florian Boehnke, an ICIS analyst, said the sector’s ability to respond could remain limited even if gas prices rise further: “Even if the price of gas reaches EUR100/MWh, the power sector could not react that much more.”