In the medium term, the operation of gas-fired power plants in Europe is likely to be ten times more expensive than the creation of new solar power plants. This is the conclusion of a study from Norway.
According to a Norwegian study, the operation of gas-fired power plants could soon become unprofitable. (Source: Rystad Energy)
- A study comes to the conclusion that the production of solar power will soon be significantly cheaper than the operation of gas power plants.
- The study was conducted and published by Oslo-based company Rystad Energy.
- The study is entitled: “The beginning of the end of gas power plants in Europe”.
According to a Norwegian study, gas-fired power generation, currently still the backbone of European energy supply, will soon be unprofitable. According to Rystad Energy, it would make much more economic sense to focus on the expansion of solar energy instead.
The study cites two key factors as the reason for this: rising gas prices on the one hand and falling costs for creating new photovoltaic capacities on the other. With the current gas price development, it is ten times more expensive in the medium term to continue to operate the existing gas-fired power plants.
The study is based on the current gas prices of the Dutch Title Transfer Facility, through which Dutch natural gas trading is carried out. Here the average price rose from 46 euros per megawatt hour (MWh) in 2021 to an average of 134 euros per MWh in 2022. This corresponds to an increase of 187 percent.
Forecast for the European energy mix by Rystad. (Source: Rystad Energy)
In August of this year, the price reached a historic high of EUR 330 per MWh. At that time, generating electricity from gas cost 700 euros per MWh. Nevertheless, in the first seven months of 2022, the share of gas power generation increased by four percent. Also because at the same time the share of hydropower and nuclear power fell by 100 terawatt hours (TWh). Rystad Energy expects gas consumption in Europe to increase as winter approaches.
On the other hand, the company expects that in 2023 new solar and wind power plants will contribute more than 50 gigawatts (GW) of electricity and also the share of nuclear power will increase by 30 gigawatts, just due to the commissioning and recommissioning of existing nuclear power plants in France. In the longer term, according to the study results, gas-fired power generation will no longer pay off.
Gas will continue to play an important role in the European energy mix for a while. But unless there is a fundamental change, renewable energy will soon make up the majority. Not only environmental aspects speak in favor of this, but above all economic ones.
Carlos Torres Diaz, Rystad Energy
Another result of the study: If the money spent on gas-fired power plants is put into the expansion of renewable energies by 2028, their capacity will increase to 333 gigawatts / 663 terawatt hours. At that point, alternative forms of energy could finally replace gas-fired power generation. You can see the full study results here. We have compiled further news on the subject of alternative energy generation in the linked overview.
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