• German utility giant Uniper said it will restart a coal-fired power plant to generate electricity. 
  • The plant will provide power from Monday to April next year, after Russia halted gas flows to the country again.
  • Europe is facing a major energy crisis and the switch to coal signals supplies are under pressure. 

Germany's utility giant Uniper said it will restart a mothballed coal-fueled power plant to generate electricity after Russia restricted gas flows to the country again.

The Düsseldorf-based company, which is Europe's biggest buyer of Russian gas, said it will temporarily fire up the Heyden 4 hard-coal-fired power plant to start generating power from Monday. It will provide electricity probably until the end of April 2023.

Uniper's switch to coal, after ending operations in 2020 as past of its decarbonisation plan, highlights what one analyst has called a "scary" energy shortage in Europe as Russia cuts gas supply and heatwaves drive up demand. 

In a surprise move Friday, Russia's state-run energy giant Gazprom said it would halt Nord Stream 1 gas flows to Germany for three days while the pipeline undergoes maintenance. The pipeline's flows have already been cut to just 20% of capacity.

The European energy crisis has left several regional leaders fearful about winter as supplies get squeezed, and some officials have accused Moscow of weaponizing energy in retaliation for Western sanctions imposed after Russia invaded Ukraine.

European prices of natural gas soared almost 20% to fresh record highs after the Nord Stream 1 pause news, and the energy worries are unsettling other financial markets.

The move to revive Heyden 4 was prompted by a German law passed to ensure energy security, Uniper said. The law sets out a ban on the use of gas and calls for a switch to coal power plants to generate electricity.

"It appears that demand destruction remains the most obvious but painful cure right now, along with a longer-term focus on ensuring a broad-based supply of energy from coal, gas, nuclear, solar, hydrogen, and more," Saxo Bank analysts said in a note Tuesday. 

The Petershagen plant could keep producing electricity for another year beyond next April if the law is extended, Uniper said.

The "envisaged operation of Heyden 4 will be restricted due to limitations on the rail transportation capacity of hard coal to the site, which might get lifted once additional transportation capacity becomes available," it noted. 

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