Gas-to-coal switching rises as higher gas prices reshape power markets

Gas-to-coal switching is accelerating in key power markets as rising gas prices linked to Middle East tensions push utilities toward cheaper coal-fired generation.

According to recent analysis from Rystad Energy, higher gas prices are already triggering gas-to-coal switching across import-dependent regions, particularly in Asia and Europe. As utilities prioritise affordability and security of supply, coal-fired generation is expected to increase compared with last year.

This reflects a familiar pattern: when gas prices spike, coal regains competitiveness in the power stack — especially in markets with existing coal capacity and limited short-term alternatives.

However, the longer-term outlook remains structurally different.

Sustained volatility in fossil fuel markets is reinforcing investment in renewables, storage and energy system flexibility.

The post-2022 energy crisis demonstrated how quickly policy and capital can shift toward cleaner energy sources, with similar dynamics now re-emerging.

For coal markets, this creates a dual narrative:
Short-term support from fuel switching and energy security concerns
Long-term pressure from accelerating energy transition policies

In the near term, higher gas prices are likely to underpin coal demand in power generation. But structurally, the trend continues to point toward a gradual decline in coal’s role as renewables scale.

Source: Rystad Energy