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Market Chatter: Europe's Power Utilities Turn Back to Coal as Gas Prices Surge

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European utilities are returning to coal as soaring natural gas prices erode the economics of gas-fired power generation, reversing a trend that has pushed the region's dirtiest fossil fuel out of its electricity mix, Reuters reported Thursday, citing industry analysts.

Power generation from coal and lignite is expected to rise by about a quarter over the next six months, while output from gas-fired plants is projected to fall by a similar amount. The European Commission did not immediately reply to' request for comment.

The shift comes as the Middle East conflict disrupts liquefied natural gas shipments through the Strait of Hormuz, pushing benchmark European gas prices above 80 euros ($90.98) per megawatt-hour in September. That's the highest level in three years, reshaping European power market economics.

On average, coal and lignite plants are now more profitable to operate than gas-fired units for the first time since at least 2024. Coal accounted for just 9.2% of electricity generation in the European Union in 2025, the lowest level on record. The fuel supplied over a third of the bloc's power in 1990.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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Natural Gas Update: US Prices Rise on Inventory Expectations, While European Prices Gain Despite Renewed Peace Talks

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