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Growing renewable generation pushes out coal in the EU

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World Coal,

Growth in renewable power generation, coupled with stagnant demand for electricity, has seen coal-fired power’s share of the EU’s energy mix drop for the first time since 2010, according to The Economic Intelligence Unit (EIU).

Renewable generation (excluding hydropower) rose 13% last year, despite overall electricity demand dropping by 1%. With gas-fired power already squeezed, this continued growth in renewable generation is now affecting coal, said The EIU: “Two countries that saw a marked drop in coal-fired power generational, the UK and Spain, also witnessed steady rises in renewable energy generation in 2014 of 34% and 12% respectively”.

Meanwhile, in Germany, coal-fired power generation fell in the first half of this year by 4% (lignite) and 11% (hard coal). “In the longer-term, the cost of generating renewable power will decline further, eroding coal’s cost advantage,” noted The EIU.

Coal will also be hit by tightening regulations on power plant emissions. The current Large Plants Combustion Directive (LPCD) will force 6 GW of coal-fired capacity in the UK alone. Its replacement – the Industrial Emissions Directive (IED) – includes even more stringent emissions limits, forcing the retirement of around 65 – 70% of the EU’s current coal-fired capacity by 2023, according to Cedigaz. “Construction of cleaner plants to meet these new standards will only partially replace the lost capacity,” added The EIU.

“Coal’s recent recovery was temporary,” concluded The EIU: “a decade from now, the EU will rely on less coal for electricity, having returned to the downward trend in coal consumption seen from the mid-1990s until 2010”. As a result, The EIU forecasts coal demand will fall 1% in total over this year and next and by at least a third to 2030.

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