Natural gas ups share in German generation mix in Aug as coal, lignite fall

• Hard coal plunges 61% on year, lignite drops 39%
• Natural gas-fired output rises 34% at 3.9 TWh
• Fuel switch prices indicate lower gas burn in Sept
Germany’s natural gas-fired power production rose on the year in August, while hard coal and lignite burn stepped down, an analysis by S&P Global Commodity Insights showed.

In thermal production, gas-fired generation was up 34% on the year last month at 3.9 TWh, supported by a sharp yearly drop in THE and TTF hub prices. With the exception of nuclear output that stood at zero, hard coal production lost the most in August, falling 61% on the year to 2 TWh. Lignite generation dropped 39% to 5.4 TWh, Fraunhofer ISE data showed.

However, looking into September, a strong coal-to-gas switching trend may not be as marked as in recent months because of the recent rally on the THE and TTF gas hubs amid potential LNG disruption.

German September clean spark spreads (CSS) for 50%-efficient gas plants averaged about minus Eur5.50/MWh ($6/MWh) last month and were on average Eur1.5/MWh below clean dark spreads (CDS) for 45%-efficient coal plants, S&P Global data showed.

Margins for modern 60%-efficient gas plants were still in positive territory with the respective front-month CSS averaging Eur11.3/MWh through August.

About 55% of German installed gas-fired capacity is likely to have an efficiency of 55% or higher, according to S&P Global analysts. In hard coal, about 60% of installed capacity has efficiency of 40% or lower.

Looking at renewable sources, solar output edged down at 6.7 TWh, yet a 28% rise in aggregate wind production and a 53% jump in hydroelectric generation were more than enough to offset the drop.

Aggregate power consumption in August stood at around 36.8 TWh, down from nearly 37. 5 TWh a year earlier.

German Power Generation (TWh) Aug. 2023 Aug. 2022 % change
Wind (onshore + offshore) 6.8 5.3 28
Solar 6.7 7.6 -12
Lignite 5.40 8.90 -39
Gas 3.9 2.9 34
Biomass 3.4 3.4 0
Hydro 2.3 1.5 53
HardCoal 2.0 5.1 -61
Waste (non-renewable + renewable) 0.9 0.8 15
Nuclear 0.0 2.9 -100