Coal & Natural Gas Power Generation in European Union 2026: Industry Statistics & Trends

The Coal & Natural Gas Power Generation industry in the European Union comprises facilities that convert the chemical energy of fossil fuels into electrical energy. The sector is undergoing a rapid structural contraction, characterized by an aggressive transition toward renewable energy alternatives and strict carbon pricing mechanisms. According to official Eurostat figures published in 2026, fossil fuel-based electricity accounted for 29.6% of the total EU generation mix in 2025, experience a minor temporary rebound from 2024 due to lower regional hydropower output. Simultaneously, the long-term phase-out of solid fuels remains robust, with brown coal supply dropping by 7.7% to 184,741 tho

Industry snapshot

Key public data points

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What does the Coal & Natural Gas Power Generation in European Union industry cover?

This industry encompasses the operation of utility-scale thermal power stations that utilize solid or gaseous fossil fuels to produce electricity. The scope includes both dedicated coal-fired combustion plants and combined-cycle gas turbine (CCGT) installations, which frequently support grid stability.

• •Covers the conversion of hard coal, lignite (brown coal), and natural gas into grid-transmitted electricity.
• •Categorized under NACE Rev. 2 group 35.11, specifically isolating conventional thermal power stations.
• •Excludes the upstream extraction of fuels and the downstream distribution networks managed by separate grid operators.

Who operates in the industry and how is it structured?

The market structure across the European Union is moderately concentrated and heavily influenced by national legacy monopolies and large multinational utilities. Operations are highly capital-intensive, requiring extensive compliance structures to operate within regional emission boundaries.

• •Dominated by historically state-backed or major public utility enterprises operating cross-border generation portfolios.
• •Operators face stringent dispatch hierarchies where low-marginal-cost renewable assets receive transmission preference.
• •Market dynamics vary strongly by member state, with Poland remaining heavily reliant on coal while nations like Italy and Germany rely on gas to balance intermittent loads.

What drives demand in the industry?

Demand for coal and natural gas generation is primarily driven by the need for dispatchable baseload power and grid flexibility during periods of low renewable output. General industrial consumption and extreme weather events further dictate short-term operational rates.

• •Serves as the primary backstop for grid reliability when wind and solar generation drops.
• •Compensated heavily via national capacity mechanisms designed to ensure adequate power reserves.
• •Influenced by broad macroeconomic factors, such as the overall volume of industrial activity and commercial electrification.

Who are the notable companies in the industry?

The competitive arena features large-scale European utilities that are actively balancing legacy fossil portfolios with aggressive green capital expenditures. These companies compete based on generation efficiency, fuel procurement pricing, and carbon asset optimization.

• •Electricité de France (EDF) operates significant thermal generation assets alongside its primary nuclear fleet.
• •Enel S.p.A. maintains large gas-fired operations in Southern Europe while actively scheduling its final coal plant retirements.
• •RWE AG represents a dominant operator in Germany, shifting rapidly away from lignite toward gas and renewables.
• •Uniper SE manages critical gas-fired generation capacity across Central Europe and serves as a primary provider of grid security.

What are the recent trends and outlook?

The industry is witnessing an unprecedented contraction of coal assets, which are increasingly marginalized by cheaper wind and solar installations. Natural gas continues to act as a bridging fuel, though its volatility exposes utilities to significant market price fluctuations.

• •In 2025, wind and solar generated 30% of EU electricity, surpassing total fossil fuel generation (29%) for the first time on record (Ember).
• •Coal power reached a historic low share of just 9.2% of the EU electricity mix in 2025 (Ember).
• •A temporary drop in regional hydropower by 11.8% in 2025 necessitated an brief uptick in gas usage to offset the deficit (Eurostat).

How is the industry regulated?

Regulatory pressures represent the single largest factor shaping the industry's operations and financial viability. The European Union's aggressive climate targets mandate a structural departure from carbon-intensive power generation.

• •Strictly governed by the EU Emissions Trading System (EU ETS), which imposes direct financial costs on every ton of carbon dioxide emitted.
• •Influenced by the EU Affordable Energy Action Plan and directives targeting a complete phase-out of Russian fossil gas imports by 2027.
• •Industrial emissions are capped by the Industrial Emissions Directive (IED), forcing compliance or closure of older thermal plants.

Government, statistical and trade sources used for this Claight analysis.

• Eurostat Energy Supply Trends 2026 ·
• Ember European Electricity Review 2026 ·
• European Commission Directorate-General for Energy ·
• Eurostat NACE Rev. 2 Statistical Classification