In Europe, wind power now generates more electricity than coal

Europe’s power producers generated more electricity from wind than from coal for the first time in the last quarter of 2023, marking a key milestone for regional energy transition efforts. Europe’s utilities generated a record 193 terawatt hours (TWh) of electricity from wind sites in the October to December window in 2023 compared to 184 TWh from coal-fired power plants, data from think tank Ember shows. Wind generation during the final quarter of 2023 was roughly 20% more than in the same quarter in 2022, and came despite widespread setbacks for the wind installation sector in 2023 due to high labour, materials and financing costs. New policy support agreed by European lawmakers in late 2023, including financing for turbine manufacturers and shorter permitting times for developers, should help further boost regional wind generation in 2024, and may potentially widen wind power’s lead over coal going forward. COAL COMEBACK? While additional wind generation capacity is widely expected throughout Europe in 2024 and beyond, the outlook for coal-fired generation remains less clear, and will be a key factor in determining how sustainable wind power’s lead over coal may be. In particular, coal-fired output in Germany, Poland and Turkey - which account for roughly half of Europe’s total coal-fired generation - will be key in determining whether Europe as a whole can sustain its recent clean energy momentum away from high-polluting fossil fuels. Europe’s three largest coal consumers all pared coal use in power generation to multi-year lows in the opening half of 2023 as weak regional industrial activity curbed overall power demand just as utilities brought greater volumes of clean power online. However, each country then ramped up coal-fired generation over the latter months of 2023 as demand for heating picked up, although overall coal-fired generation in each country remains well below previous peaks. Going forward, overall economic momentum will be the main deciding factor on how much coal is used in power generation in each country. If manufacturing activity expands in 2024, as is being fostered in each country by supportive government policies, then overall power consumption will also rise and will likely force power generation firms to increase output from fossil-fuel plants alongside renewables sources. In particular, any sustained upturn in output from heavy industry - especially among chemical, steel and fertilizer plants - will likely place strain on national power systems and require greater generation from coal and natural gas plants to accommodate the associated rise in overall energy consumption. That said, if regional industrial activity remains muted in 2024 despite ongoing government stimulus efforts, then overall energy demand will remain below previous peaks and will allow power generation firms to continue to lift the proportion of clean electricity in the generation mix. WIND MOMENTUM Regardless of the state of European industrial consumption and activity in 2024, power developers are expected to ratchet up wind power project construction and grid connection in 2024, especially within key markets such as Germany, the United Kingdom, Spain, France and Denmark. In addition, several government tenders for new wind capacity - both onshore and offshore - are expected in 2024 in the wake of the regional European Union policy agreements sealed last year following setbacks for wind sector businesses. Germany plans a tender for 8 gigawatts (GW) of new offshore capacity in 2024, while Denmark is expected to begin auctions for a total of 9 GW of offshore projects this year, according to S&P Global. France will also boost its wind power footprint over the coming year or so through the support of the construction of two floating wind farms with a collective capacity of up to 280 megawatts (MW) off the south coast. As these and other projects come online, they will further lift Europe’s total wind generation beyond the 604 TWh produced in all of 2023, and help the region extend its recent stretch of strong annual clean power expansions. Over the near term, European coal-fired power generation may also creep higher as industrial activity recovers, but if power firms follow through on the planned development pipeline, wind power looks set to consistently overshadow coal power in Europe’s electricity generation mix over the longer run.