Wind Energy Overtakes Coal Use as Electricity Source in Europe

For the first time in Europe’s history, wind-powered energy generation surpassed electricity from coal in the fourth quarter of 2023. Energy think tank Ember found that European power producers used wind power sites to generate a record 193 terawatt hours (TWh) of electricity from October to December 2023 compared to 154 TWh from coal power plants.

Last year’s final quarter saw wind generation increase by more than 20% compared to the same time window in 2022, even though the wind installation industry was constrained by factors such as high financing, material and labor costs. These factors could be mitigated by European Union policies enacted in late 2023 that offer incentives, such as shorter permit times for developers, and turbine manufacturing financing, which could widen the gap between wind- and coal-generated electricity even further.

Several European nations were forced to turn back to coal after Russia invaded Ukraine and exacerbated the ongoing energy crisis by cutting natural gas supplies to the rest of Europe. With shortages in the energy industry snowballing and costs rising amid a global energy crisis and approaching winter, nations such as Germany, the Netherlands and Austria fired up their previously shut down or restricted coal power plants to shore up their energy supplies.

Fortunately, EU nations also accelerated their efforts to deploy solar and wind-power generation technology, resulting in the displacement of 18 terawatt-hours (TWh) worth of natural gas consumption and a 31% year-on-year reduction in coal and fossil gas by August 2023.

Monthly wind energy generation also increased by 29% compared to August 2022 and year-on-year solar generation rose by 14%. However, even though renewable energy generation in the EU experienced admirable growth in 2023 and is predicted to widen its lead over coal this year, coal-fired electricity still has an uncertain outlook.

Whether or not wind can maintain its lead over coal in 2024 will depend on how the fossil fuel performs in 2023. Most EU nations are keen on completely cutting coal out of their energy mixes as part of global efforts to combat climate change, but the global energy crisis has consistently frustrated their efforts.

Germany, which was one of the countries that loosened restrictions on coal-fired generation after Russia cut natural gas supplies to Europe, coupled with Turkey and Poland, account for around one-half of the EU’s total coal-fired energy generation, will also help determine if the EU can keep its renewable energy momentum and reduce coal use.

This gradual shift away from coal puts coal production companies such as Alliance Resource Partners LP (NASDAQ: ARLP) on notice that they have to start thinking of other segments of the sector to venture into since coal is unlikely to remain viable in years to come.

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