Dutch coal-burn halved in 2020

27/11/2020 08:28 Coal

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Coal-to-gas fuel switching cut coal-fired generation in the Netherlands by more than 50pc year on year in January-August, despite power generation increasing.

Dutch coal-fired generation totalled 5.2TWh in January-August, down from 12.8TWh a year earlier. This was despite the country's overall power generation increasing by 2pc on the year to 77.8TWh — an atypical trend in Europe, where power demand has been severely affected by the Covid-19 pandemic.

 

Coal was partly displaced by competitive gas-fired generation, which increased to 47.8TWh in the first eight months of the year, from 44.9TWh a year earlier.

 

Clean spark spreads for a 61pc efficient gas-fired plant were €15.15/MWh wider than clean dark spreads for a 40pc efficient coal-fired plant in January-August. This was almost double the average gas-fired advantage of €8.96/MWh a year earlier, boosting the coal-to-gas fuel-switching incentive in 2020.

 

Clean spark spreads for a 61pc efficient gas-fired plant from the beginning of September to 25 November were €8.84/MWh wider than clean dark spreads for a 40pc efficient coal-fired plant. This is higher than the average gas-fired advantage of €8.06/MWh for the same period of 2019, potentially driving further — albeit more limited — coal-to-gas fuel switching.

 

Generation from other sources has also increased and pressured Dutch coal burn in 2020, with wind power increasing by 1.8TWh year-on-year to 8.9TWh in January-August and solar generation rising by 2TWh to 6.3TWh.

 

Carbon price floor

 

The Dutch senate is in the process of introducing a new carbon price floor for electricity generators, although it is unlikely to make a material difference to generation costs.

 

The proposal for the new top-up tax was put forward by the Dutch government in June last year and is due to be debated in the House of Representatives next month.

 

The carbon price floor for electricity generators was originally set to apply from 1 January 2020, starting at €12.30/t CO2 equivalent (CO2e) and rising to €13.50/t CO2e in 2021 and €31.90/t CO2e in 2030. But with the December 2021 emissions trading system contract currently trading at more than €27.21/t CO2e, the new price floor is unlikely to have any immediate effect on carbon costs for generators in the next few years.

 

The Netherlands adopted a law in 2019 prohibiting the use of coal for the production of electricity beyond 1 January 2030.

 

Vattenfall's Hemwig 8 coal-fired plant, which emitted around 3.6mn t/year of carbon dioxide, closed in December last year.

 

source:argusmedia.com

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