57 / 288
Ten-Year Network Development Plan 2017 Main Report |
57
2.2.4 FUEL PRICES AND EMISSION
TRADING SYSTEM
As described in the power generation section earlier in this demand chapter, one
reason for the increased use of coal for power generation since 2010 but with a sub-
sequent small recovery of gas in 2015 is the price difference between the two fuels.
Reviewing data from the European Commission (DG Energy), since 2012 the price of
coal in Europe has been on a downward trend, largely driven by the shale transformation
of the gas industry in the USA, reducing their domestic demand for coal. European gas
prices remained above coal, with LNG (liquefied natural gas) supplies heading to Asia
due to increased demand in the region and following the 2011 Fukushima accident and
ensuing shutdown of nuclear reactors in Japan.
However, these prices drove the increase in global supplies of LNG and as demand in
Asia began to weaken, Japan LNG prices declined during 2014 before becoming com-
parable to UK NBP Spot prices in early 2015. In addition to this, oil prices plummeted in
late 2014 and in January 2016 hit the lowest price since 2003, which affects oil indexed
gas contracts.
These factors have seen European gas hub prices steadily decreasing throughout 2015,
increasing the competition between coal and gas in the power market.
0
10
20
30
60
50
40
€/MWh
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4
2012
2013
2014
2015
5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4
1 2 3 4
5 6 7 8 9 10 11 12
Henry Hub
NBP
Japan LNG
2016
Figure 2.13:
Evolution of US, EU and Japan LNG Prices.
(Source: Quarterly Report on European Gas Markets, DG Energy, ENTSOG depiction)
20
0
10
30
100
90
80
70
50
60
40
0
5
10
45
40
35
30
20
25
15
€/MWh
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4
2012
2013
2014
2015
2016
5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4
1 2 3 4
5 6 7 8 9 10 11 12
Coal (€/tonne)
Brent (€/bbl)
NBP (€/MWh)
€/tonne (Coal) or €/bbl Brent)
Figure 2.14:
Evolution of European spot prices for gas and coal.
(Source: Quarterly Report on European Gas Markets, DG Energy, ENTSOG depiction)