Opinion | No coal comeback: Europe’s renewable energy transition is in hyperdrive

Europe’s coal- and gas-buying frenzy has abated as renewable energy output hit a record high last year with new policies in place

The EU’s fossil fuel power could plummet by 20 per cent this year, double the previous record fall in 2020

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An engineer installs a solar panel on the roof of a home in Barcelona, Spain, on September 7. Spain and other Mediterranean countries generated record amounts of power from wind and solar farms, underscoring the potential for renewables to replace expensive fossil fuels. Photo: Bloomberg

Published: 10:00pm, 31 Jan 2023

When Russia invaded Ukraine last February, President Vladimir Putin stepped up his strategy of weaponising energy exports to Europe. Europe responded by going on a buying frenzy for coal, gas and oil, competing against buyers in Asia, which caused global fossil fuel prices to spike.

Further challenges in the European Union’s electricity sector exacerbated the situation. A one-in-500-year drought affected Italy, France and Spain, amid extensive nuclear-powered electricity outages in France caused by corrosion, on top of Germany’s nuclear power station closures. That led to the lowest hydro and nuclear power output in the EU since at least 2000.

But these electricity crises are predominantly over. The story in 2023 will be very different. Russia’s war pushed Europe’s transition to clean electricity into hyperdrive, which means we are likely to see a record fall in both gas- and coal-generated power in the EU.

For Asia, that means Europe’s gas- and coal-buying frenzy, which had eased towards the end of last year, should continue to fall this year.

2022 was a tough year for Europe’s electricity system. Prices were already sky-high because of spiking gas and coal prices. Then the nuclear and hydropower crises cut electricity generation by 185 terawatt-hours (TWh) year on year, leaving a 7 per cent deficit and fuelling concerns of a coal comeback.

Five-sixths of this deficit was made up from growth in wind and solar energy, as well as falling electricity demand. Just one-sixth (28 TWh) was made up with coal power, adding 0.3 per cent to global coal-generated power. Gas-generated power was almost unchanged.

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