Germany is considering the reintroduction of coal-fired power plants to support its winter power supply. This decision comes as part of the country's efforts to ensure energy security in the face of ongoing challenges.
1. The German government has approved a plan to bring some shuttered coal-fired power plants back online.
2. This move is primarily in response to the reduced imports of Russian natural gas following Russia's invasion of Ukraine.
3. Several coal-fired units operated by energy companies RWE and LEAG at their Niederaußem, Neurath, and Jaenschwalde power plants will be temporarily reactivated.
4. The reactivation of coal plants is seen as a measure to provide more security for Germany's electricity supply.
5. This decision comes despite Germany's commitment to phase out all coal-fired generation by 2030.
6. In 2023, Germany's coal power production dropped to its lowest level in 60 years, with lignite power production falling to the lowest level since 1963 and hard coal power production dropping to the lowest level since 1955.
7. The German government maintains that it does not plan to introduce a new law to ensure a coal exit earlier than 2038, leaving the possibility of a market-driven phase-out before then.
This reintroduction of coal-fired power plants maybe a temporary measure to address immediate energy security concerns, but the result is tha coal is back in tge equation.
One comment, thermal coal is very differentiated, just like the different types of met coal. The demand for the lower qualities is expected to continue to fall, but the demand for high quality (high CV) thermal coal is expected to continue to grow. So while thermal coal itself can be seen as in terminal decline, there's large bifurcation under the surface, and the supply demand gap in high CV thermal is much more severe longer term than even in met. I think this gets overgeneralized, and all thermal coal gets lumped together when they shouldn't.
Hard to speak for him, but I preferred CEIX as the pure play on high CV export. Now they're watering it down a bit and diversifying away with the ARCH deal, but it will be accretive and the price is right.
On Russia, I notice that although there is only a handful of met coal mine pipelines, they produce a significant amount of met coal. For example, the expansion of Elginskiy Coal Mine will add 25mil tonnes of met coal production.
Great article, thank you!
Excellent writeup, thanks!
Germany is considering the reintroduction of coal-fired power plants to support its winter power supply. This decision comes as part of the country's efforts to ensure energy security in the face of ongoing challenges.
1. The German government has approved a plan to bring some shuttered coal-fired power plants back online.
2. This move is primarily in response to the reduced imports of Russian natural gas following Russia's invasion of Ukraine.
3. Several coal-fired units operated by energy companies RWE and LEAG at their Niederaußem, Neurath, and Jaenschwalde power plants will be temporarily reactivated.
4. The reactivation of coal plants is seen as a measure to provide more security for Germany's electricity supply.
5. This decision comes despite Germany's commitment to phase out all coal-fired generation by 2030.
6. In 2023, Germany's coal power production dropped to its lowest level in 60 years, with lignite power production falling to the lowest level since 1963 and hard coal power production dropping to the lowest level since 1955.
7. The German government maintains that it does not plan to introduce a new law to ensure a coal exit earlier than 2038, leaving the possibility of a market-driven phase-out before then.
This reintroduction of coal-fired power plants maybe a temporary measure to address immediate energy security concerns, but the result is tha coal is back in tge equation.
Great read, look forward to the next!
Thank you for sharing your work. I was just starting to look at Nucor and wanted to learn more about this industry. I noticed this news. https://www.msn.com/en-us/money/companies/united-states-steels-expanded-electric-arc-furnace-capabilities-to-help-boost-core-earnings-morgan-stanley-says/ar-AA1hzGLT . Look forward to part 2.
Fantastic writeup! Thanks for sharing it with us and looking forward to the next one in the series.
Good article.
One comment, thermal coal is very differentiated, just like the different types of met coal. The demand for the lower qualities is expected to continue to fall, but the demand for high quality (high CV) thermal coal is expected to continue to grow. So while thermal coal itself can be seen as in terminal decline, there's large bifurcation under the surface, and the supply demand gap in high CV thermal is much more severe longer term than even in met. I think this gets overgeneralized, and all thermal coal gets lumped together when they shouldn't.
Interesting. Do you think this is the reason why Mohnish likes $CEIX and $arch so much?
Hard to speak for him, but I preferred CEIX as the pure play on high CV export. Now they're watering it down a bit and diversifying away with the ARCH deal, but it will be accretive and the price is right.
I think you forgot about Mongolian exports. It’s now a bigger supplier to China than Australia.
really thorough and helpful article - thank you
Excellent Article, thank you
On Russia, I notice that although there is only a handful of met coal mine pipelines, they produce a significant amount of met coal. For example, the expansion of Elginskiy Coal Mine will add 25mil tonnes of met coal production.