• Coal is making a comeback as Europe races to find alternatives to Russian natural gas.

• The price of coal is 5 times higher than normal as countries try to secure energy supply for winter.

• Surging natural gas prices and a hydropower crunch are other factors, 2 top energy analysts explain.

Coal is re-emerging as a key source of energy for European countries racing to replace increasingly scarce natural gas as Moscow shuts off key pipeline flows.

Europe is caught in a worsening energy crisis as Russia uses its energy exports to retaliate against sanctions. So countries like Germany are turning to coal to secure energy supplies before winter hits.

Power generation using coal has shot up over 20% in France, Germany, Italy, Netherlands, Spain and the UK together since last year, Rystad Energy data shows. European countries have increased coal consumption this year.

"Coal is definitely making a comeback, with skyrocketing natural gas prices and drought," Ole Hvalbye, an analyst at Swedish bank SEB, told Insider. "Now it is all about surviving the winter."

Here, analysts lay out the factors shaping the appetite and market for coal — and whether they mean soaring prices for the fossil fuel will keep climbing.

Soaring natural gas prices 

Moscow's drumbeat of disruptions to flows has sent European natural gas prices up 300% this year, and to record highs in August.

That has prompted power companies in Austria, the Netherlands and Italy to eye the use of coal again. German utility giant Uniper has revived a mothballed coal-fueled plant until April 2023.

"Coal has been the cheaper option for power generation for most of 2022 and has also been given a boost by the tight supply situation for gas in Europe," Rystad Energy analyst Fabian Rønningen told Insider.

Given current prices, coal is expected to be the more competitive option for the next two-and-a-half years, he added.

Global coal prices hit their highest level since 2008 as the energy crisis worsened last week, and European coal prices alone have risen about 150% since the start of the year.

Hvalbye said Europe's loss of Russian natural gas volumes is cascading into global energy markets.

"Other fossil fuels such as oil and coal are flowing from the global markets to Europe due to ridiculously high prices there," he said.

"As a result, European and Australian coal prices are now roughly five times higher than the normal level."

Winter is coming

The pressure is on EU governments to secure energy supplies for the colder months, when households and businesses use more power.

"We see a very tough winter ahead. Q4-22 and Q1-23 will be difficult, and Europe will likely be in need of all the other alternatives they can get their hands on, heading into this storm," Hvalbye said.