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Germany is now generating nearly a third of its electricity from coal as it scrambles to replace Russian gas before winter

A coal-fired power plant
Coal is overtaking natural gas as an electricity-generating fuel in Germany.helt2/Getty Images
  • Germany is relying more on coal to produce electricity as Europe's energy crisis worsens.

  • Coal-generated electricity rose by 17.2% year-on-year in the first half, per Destatis data.

  • Meanwhile, Germany only derived 11.7% of its electricity from natural gas, down from 14.4%.

Germany is relying more on coal to generate electricity, as Russian gas cuts force the country to seek alternative sources of fuel before winter.

The European nation produced 82.6 kilowatt-hours of electricity from coal-fired power plants in the first six months of 2022, a 17.2% rise from the the same period last year, according to new data from Germany's national statistics office, Destatis. As a result, it generated 31.4% of its electricity from coal.

Meanwhile, Germany slashed its electricity production from natural gas, reducing it from 14.4% to 11.7% of its total electricity mix, Destatis noted. Soaring prices have made natural gas less and less affordable in recent months.

The shift from gas to coal highlights Germany's desperate efforts to stockpile fuel before cold weather takes hold later this year, as repeated gas cuts from Russia deplete European supplies. Russia has been accused of "weaponizing" energy in retaliation to Western sanctions and boycotts imposed on the nation following its invasion of Ukraine.

Given coal is cheaper than gas and a more accessible fuel resource for Germany, the country has effectively been forced it to make a u-turn back to the dirtiest fossil fuel. One of its energy companies, Uniper, recently fired up a mothballed coal-fueled power plant to cut its dependency on Russian energy.

Dutch TTF natural gas futures, the European benchmark for natural gas prices, have been soaring as the market tightens, with prices reaching record highs above 340 euros ($340) this year. Prices were down 4% at 204 euros at last check Thursday, thanks to prospects of a European plan to cap Russian gas prices.

Rotterdam coal delivery for October fell 5% to $338, down from more than $430 in March, according to ICE Futures. Analysts warned that greater demand for coal could dial up the cost of the commodity.

"When nat gas is this expensive then consumers prefer coal and oil instead, so this goes also up in price," SEB analyst Ole Hvalbye told Insider.

While Europe faces a crippling energy crisis, Germany has been hit the hardest with one of the country's biggest banks, Commerzbank, predicting it could fall into a 2009-style recession if Russia permanently chokes off supply.

Read the original article on Business Insider