By Alex Thackrah

December 1, 2022 - German daily and weekly hard coal-fired generation has hit three and two-year highs, respectively, and looks set to climb even further in the near-term as a spell of weak wind generation coincides with below-average temperatures.

Daily hard coal-fired generation was 14.5GW on 29 November, its highest since 9 December 2020, according to Fraunhofer Ise data.

Weekly generation was 10.1GW on 20-26 November, its highest since mid-December 2021. Based on available capacity of 12.6GW for the period, this implies plants were working at a load factor of around 80pc. Generation was just 5GW on 1-15 November and 8.7GW in November 2021.

Hourly German hard coal-fired generation has climbed further today, hitting 17.8GW at certain hours, according to figures from Agora Energiewende.

This uptick in coal burn mirrors the trend across much of Europe, where hard coal-fired output has stepped up as the first spell of below-average temperatures of the winter heating season have set in. French coal-fired generation, while much lower than in Germany, reached near maximum capacity of 1.8GW at certain hours on 28 November as the Cordemais 4 unit returned to service.

This has supported Europe-delivered coal prices, with Argus' NAR 6,000 kcal/kg cif Amsterdam-Rotterdam-Antwerp (ARA) assessment climbing to a six-week high $256/t on 29 November, up from a nine-month low of $177.69/t on 9 November.

Recent coal supply disruption in Colombia and South Africa also boosted prices. But spot demand remains relatively weak, with utility buyers reportedly well covered and owing to firm port stocks at ARA, which hit a seven-week high of 6mn t this week.

Clean dark spreads (CDS) have climbed sharply in recent days, with the day-ahead CDS for a 40pc efficient German coal plant hitting €238.15/MWh on 29 November, a €113.03/MWh premium to the equivalent clean spark spread for a 55pc efficient gas plant.

Generation outlook

There is scope for German hard coal-fired generation to remain elevated and even rise in the near-term, although given projected available capacity is only around 16GW in the first 10 days of December, according to EEX, the upside could be limited.

Coal-fired generation of 13GW equates to 93,000t of NAR 5,800 kcal/kg coal burnt each day in 40pc efficient plants, or 2.9mn t over the course of a month.

The return of several coal plants in Germany under the Replacement Power Plant Availability Act should support a further rise in generation. Utilities have also been expanding storage capacities at both power plants and ports since the second quarter to facilitate the return of units and expectations of firmer coal-fired generation.

German wind load factors are expected to remain low until 2 December at 6-14pc, before rising to 28pc by 6 December, according to Spot Renewables. Temperatures in Berlin are expected to fall to between 1-5°C below seasonal norms on 1-14 December, according to Speedwell Weather.

Other fossil fuel-based generation is also running at a high level in Germany. Lignite generation, which is based on domestic production rather than imported coal, is at its highest since January 2021, averaging 14.7GW on 20-26 November. Gas-fired generation surged to 23.1GW yesterday, its highest since 2017.

Underground gas storage levels in the EU remain high, but were drawn down to 94pc on 28 November from a high of 96pc on 13 November, according to provisional AGSI figures.

Europe annual coal imports to hit 4-year high

German hard coal-fired generation is on track to hit its highest annual level since 2018. Generation on 1 January-30 November was 55.8TWh, up by 24.7pc on the year and the highest for the period since 2018 (see chart).

Seaborne thermal coal imports into Belgium, France, Germany, Ireland, Italy, the Netherlands, Spain and the UK hit 76.5mn t in January-November, up by 33.5pc on the year and the highest for the period since 2018's 83.4mn t, shipping data show, although these figures could include some coking coal volumes.

Jan-Nov European imports vs German coal gen mn t, TWh