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A good year for European coal fired power stations...

The UK's Didcot power station. Not so much sweated as switched-off.

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Market Briefing
Published: October 2013
Pages: For full details, please email keithw@cmsinfo.com
Tables: For full details, please email keithw@cmsinfo.com
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Research from: energy-market-research.info
Sector: Blog

Coal is dead...allegedly. The coal power decommissioning market is expected to see a period of solid growth over the next decade as older coal power stations are replaced either by new more efficient coal power plants, or by cleaner natural gas, wind and solar facilities.

In a recent study Visiongain reckoned that decommissioning activity will be dominated by countries in Europe and North America, where coal power plants have been operating for a number of decades and where increasing environmental regulations are placing pressure on companies to reduce their output of harmful emissions.

In the case of the US, the decommissioning market will also be driven by the shale gas revolution, which is making coal power plants less economic than cleaner gas powered plants. According to Visiongain's analysis, the global coal power decommissioning market will be worth USD 1.08 billion in 2013. This includes all costs involved with the investigation, design, decontamination, demolition and A id=didcot name=didcot>closeout of plants.

As an example, earlier this year Didcot power station in the UK was powered-down for the last time - yet this one station represented 10 percent of the country's power generating capacity. This process should, however, see Carbon Dioxide (CO2) emissions across the entire EU membership continue to fall.

However, Frank Wright of energy analyst firm Douglas-Westwood this week has noted that some key nations actually recorded a rise in 2012. This is clearly 'off message' for the European political leadership that is keen to demonstrate mastery of low carbon power.

The EU’s comprehensive energy statistics shows a recovery in the use of coal, a trend seen particularly in the UK and German power sectors.

Wright suggests that the sheer speed of the US unconventional gas revolution has seen a rapid fall in North American natural gas prices, which has made natural gas more attractive to power utilities, so placing pressure on domestic coal prices. However, coal prices are global in nature, whereas natural gas prices vary greatly by region.

European utilities have been forced to rebalance their generating portfolios to meet tough EU 2020 emissions regulations, and have been substituting cleaner-burning natural gas for coal and adding renewable capacity, such as wind and solar. However, with European gas pricing relatively high and renewable energy having limitations, low coal prices have proven sufficiently attractive to motivate change.

The end result is that European utilities have been bringing mothballed coal plants back online, whilst 'sweating' older plants threatened with closure. As Wright dryly notes, the classic supply and demand model is alive and well, as provides an inconvenient truth at a time when the Intergovernmental Panel on Climate Change is saying 'Limiting climate change will require substantial and sustained reductions of greenhouse gas emissions'.

Regards

Keith Wallace
energy-market-research

Further reading:

Global Power Survey 2013-2014 - Market Trends, Buyer Spend and Procurement Strategies in the Global Power Industry
Published by icd research in March 2013
Product Synopsis“Global Power Survey 2013-2014: Market Trends, Buyer Spend and Procurement Strategies in the Global Power Industry” is a new report by ICD Research that analyzes how power industry companies' procurement expenditures, business strategies, and practices a...(more)

The UK Power Generation Expenditure Forecast 2010-2030 market study
Published by Douglas-Westwood in December 2009
The UK Power Generation Expenditure Forecast 2010-2030, focuses on the market for developing and constructing power generation capacity in the UK.  The first of its kind, it provides an independent uniquely detailed forecast of the UK’s energy landscape o...(more)

The Coal Power Decommissioning Market 2013-2023
Published by Visiongain in July 2013
The coal power decommissioning market is expected to see a period of solid growth over the next decade as older coal power stations are replaced either by new more efficient coal power plants, or by cleaner natural gas, wind and solar facilities. Decommissioning activit...(more)

 

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