European gas prices near fuel-switching levels
The Staudinger black coal power plant in Germany. No new coal plants are likely to be built in the country. (EP)
More LNG coming to Europe could push gas prices down further and prompt power generators to switch away from coal, according to a report published by Bank of America Merrill Lynch last week. Fuel switching is already evident in the UK, where gas prices have been below coal breakeven levels since last September.
"UK coal demand for power generation is now shrinking rapidly because gas is cheaper than coal due to an oversupplied global gas market, and we expect the European continent will soon follow to shed coal demand in favour of gas," the report said.