Electricity set to become cheaper after reopening coal-fired power plants

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On Monday, the cabinet unexpectedly announced that coal-fired power stations will be allowed to operate at full capacity again so as not to endanger power generation. Now they are only allowed to operate at 35% capacity, but the cabinet is giving up for fear of a gas shortage. Experts therefore expect somewhat cheaper electricity.

The announcement also came as a complete surprise to the coal-fired power plants themselves. Uniper, owner of one of Rotterdam’s two power plants, will leave the AD are not aware of the decision in advance.

As part of climate goals, coal-fired power plants are currently only allowed to operate at 35% capacity. They are expected to close completely by 2030. As a result, the four Dutch power plants have already reduced their stocks, so they now have to buy a lot more coal quickly. It will take a few weeks, explains RWE, which operates two power plants in our country, to NU.nl.

An additional problem is that from August, coal will no longer be allowed to come from Russia due to sanctions against the country. “In the short term, this will push prices up slightly,” says Machiel Mulder, professor of energy economics at the University of Groningen.

He just doesn’t expect that price to stay that high for long. “Unlike gas, there are still many countries where coal can be obtained and it is not very expensive to transport it,” he explains. The United States, China and Australia also produce coal.

“The coal market is much broader and more flexible than the gas market”

Energy expert René Peters of the TNO research institute also considers this to be the simplest and most feasible option in this situation. “The volumes we are talking about in this case will have little impact on the world price of coal,” he thinks. “The coal market is much broader and more flexible than the gas market.”

In addition, the price of electricity will probably drop slightly if more electricity is produced from coal. “It’s cheaper to generate electricity with coal than with gas,” says Peters. “So now that the power plants are reopening, the price could come down a bit, although it won’t immediately return to the level it was before the increase.”

Currently, about 55.30 billion kilowatt hours of electricity is produced each year with natural gas, while coal accounts for only 16.54 billion kilowatt hours. It is unclear how these proportions will change after reopening.

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