While European gas-fired powergen continued to decline in 2024, the volatility of gas-to-power demand is on the rise, highlighting the growing back-up role of gas in ensuring electricity supply security.
Preliminary data suggests, that gas-based generation dropped in the EU by near 10% in 2024, to its lowest point since 2014. the rapid expansion of renewables, together with better hydro conditions and improving nuclear availability has been weighing on thermal powgen.
Despite a lower gas burn on average, the volatility of gas-fired powgen has been increasing over the years, highlighting the flexibility services provided by gas-fired power plants to the electricity system, especially in those winter days, when the wind is not blowing and the sun is not shining.
The back-up of role gas is set to grow in the coming years, as the share of weather-dependent variables will continue to grow, while coal-based generation will be gradually phased-out.
And while there are other flex providers (batteries, interconnectors, demand response, etc), their contribution is still fairly limited and is available at a different time-scale than OCGTs/CCGTs.
What is your view? How will the role of gas-based generation evolve? What could be the mechanisms available to remunerate the flexibility of gas-fired power plants? What is the impact on power prices? Will we see more volatility?
Source: Greg Molnar
