Market Overview
| Study Period | 2021 - 2031 |
|---|---|
| Forecast Data Period | 2026 - 2031 |
| Base Year Market Size (2025) | 615.90 gigawatt |
| Market Volume (2026) | 605.52 gigawatt |
| Market Volume (2031) | 567.56 gigawatt |
| Growth Rate (2026 - 2031) | -1.29% CAGR |
| Market Concentration | Medium |
Major Players *Disclaimer: Major Players sorted in no particular order Image © Mordor Intelligence. Reuse requires attribution under CC BY 4.0. | |
Europe Thermal Power Market Analysis by Mordor Intelligence
The Europe Thermal Power Market size in terms of installed base is expected to decrease from 615.90 gigawatt in 2025 to 605.52 gigawatt in 2026 and decline to 567.56 gigawatt by 2031, declining at a CAGR of -1.29% over 2026-2031. The Europe thermal power market is contracting because coal, lignite, and oil retirements are exceeding additions of gas-fired capacity. Gas remains important where grids need controllable output during periods of low renewable generation and rising electricity demand. Capacity mechanisms, hydrogen-ready design requirements, and new gas import infrastructure are directing investment toward efficient CCGT plants rather than older combustion assets. Higher carbon costs and more wind and solar generation are reducing utilization for coal plants and changing the revenue model for gas facilities. The Europe thermal power market, therefore, favors flexible capacity that can earn revenue from system support, direct power contracts, and capacity payments.
Key Report Takeaways
- By source type, natural gas held 51.9% of the Europe thermal power market share in 2025, while natural gas is forecast to grow at a 1.1% CAGR through 2031.
- By technology, CCGT held 33.2% of the Europe thermal power market share in 2025 and is forecast to expand at a 2.6% CAGR through 2031.
- By capacity, plants above 1,000 MW held 35.6% of the market share in 2025, while plants below 100 MW are forecast to grow at a 2.1% CAGR through 2031.
- By application, utility-scale plants held 69.2% of the market share in 2025, while distributed thermal plants are forecast to expand at a 2.8% CAGR through 2031.
- By geography, Russia held 29.3% of the market share in 2025, while the rest of Europe is forecast to grow at a 1.9% CAGR through 2031.
Note: Market size and forecast figures in this report are generated using Mordor Intelligence’s proprietary estimation framework, updated with the latest available data and insights as of January 2026.
Europe Thermal Power Market Trends and Insights
Drivers Impact Analysis*
| Driver | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
|---|---|---|---|
| Ageing coal fleet replacement with CCGT | +0.40% | Germany, Poland, UK, Czechia, Rest of Europe | Short term (≤ 2 years) |
| Rising electricity demand from data centres & electrification | +0.30% | Ireland, Netherlands, Germany, UK, Nordic countries | Medium term (2–4 years) |
| Government backing for natural-gas 'bridge' capacity | +0.20% | Germany, France, UK, Poland, Greece | Short term (≤ 2 years) |
| Abundant new LNG/gas import infrastructure | +0.10% | Southern & Western Europe; coastal EU member states | Medium term (2–4 years) |
| Licensing wave of small modular high-temperature reactors | +0.10% | France, UK, Poland, Romania, Czechia | Long term (≥ 4 years) |
| Coal-to-biomass repowering for capacity-market payments | +0.10% | United Kingdom | Short term (≤ 2 years) |
| Source: Mordor Intelligence | |||
Ageing Coal Fleet Replacement with CCGT
Coal retirement plans are accelerating demand for efficient replacement capacity in the Europe thermal power market. ENTSO-E reported that hard coal and lignite capacity fell by 12 GW between 2024 and the winter of 2025-2026, while gas capacity rose by 4 GW.[1]European Network of Transmission System Operators for Electricity, “Winter Outlook 2025-2026 Report,” ENTSO-E, entsoe.eu Germany agreed a framework with the European Commission in January 2026 for 12 GW of controllable, hydrogen-ready capacity that is intended to operate by 2031.[2]Federal Ministry for Economic Affairs and Energy, “Grundsatzeinigung Mit Der Europäischen Kommission Über Eckpunkte Der Kraftwerksstrategie,” Federal Ministry for Economic Affairs and Energy, bundeswirtschaftsministerium.de The program gives developers with existing grid connections an advantage because replacement projects can move faster than new sites. GE Vernova received an order from Enea Group in November 2025 for two 9HA.01 combined-cycle blocks at Kozienice, with steam turbines to be made in Elblag, Poland. Local equipment production can shorten procurement timelines and support national industrial objectives during coal-to-gas replacement.
Rising Electricity Demand from Data Centers and Electrification
Data center demand is increasing the value of firm capacity in the Europe thermal power market. ENTSO-E expects European data center electricity consumption to exceed 134 TWh by 2030, compared with 87 TWh in 2024. Facilities requiring 99.999% uptime need a dependable electricity supply when renewable output is low. Gas-fired generation can provide balancing power and support grid stability in these conditions. Load concentration in Dublin, Amsterdam, London, and Frankfurt adds pressure to regional networks and favors capacity close to demand centers. Distributed CHP units and peaking plants near data campuses may secure direct power contracts that are less dependent on wholesale dispatch patterns in the Europe thermal power market.
Government Backing for Natural-Gas Bridge Capacity
Capacity mechanisms are providing revenue support for gas-fired assets in the Europe thermal power market. France published 2026-2027 capacity mechanism parameters in February 2026, including maintenance cost benchmarks for combined-cycle gas plants. Germany's program requires new controllable plants to be hydrogen-ready, which gives CCGT projects a planned route toward lower-emission fuels. The European Commission also presented an SMR and advanced modular reactor strategy in March 2026, with a goal of bringing the first small modular reactors online in the early 2030s.[3]European Commission, “Commission Unveils Strategy to Bring Europe’s First SMRs Online by the Early 2030s,” European Commission, energy.ec.europa.eu In the United Kingdom, coal-to-biomass repowering continues to receive support through dispatchable low-carbon contracts, which can preserve capacity at existing power sites. Policy design will remain a central factor in new-build decisions through 2031.
Abundant New LNG/Gas Import Infrastructure
New LNG infrastructure has strengthened the fuel supply options available to the Europe thermal power market. The European Commission states that the EU added significant LNG import capacity after 2021 as part of its diversification strategy. ACER reported that Europe imported 112 bcm of LNG in 2024, which represented a large share of regional gas imports. Additional regasification capacity improves the ability of coastal markets to supply gas-fired plants during periods of high demand. TotalEnergies and EPH completed a 50/50 joint venture in 2026 that combines LNG capabilities with more than 14 GW of CCGT capacity in 5 European countries. Integrated portfolios can manage fuel procurement and power sales together, which may improve the resilience of gas generation assets in the Europe thermal power market.
Restraints Impact Analysis*
| Restraint | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
|---|---|---|---|
| Escalating EU ETS carbon prices | -1.00% | EU27 member states; UK (UK ETS equivalent) | Short term (≤ 2 years) |
| Rapid fall in solar & wind power LCOE | -0.80% | Global, concentrated in EU, Germany, Spain, UK | Medium term (2–4 years) |
| Stricter IED air-emission ceilings | -0.40% | EU27; transposition deadline July 1, 2026 | Medium term (2–4 years) |
| Cooling-water scarcity & coastal permitting hurdles | -0.30% | France, Southern Europe, coastal EU member states | Long term (≥ 4 years) |
| Source: Mordor Intelligence | |||
Escalating EU ETS Carbon Prices
EU carbon prices are raising operating costs for fossil-fired plants in the Europe thermal power market. ESMA reported that EU allowance prices averaged EUR 74 per tonne of carbon dioxide equivalent in 2025 and reached EUR 90 per tonne in January 2026.[4]European Securities and Markets Authority, “Market Report, EU Carbon Markets 2026,” ESMA, esma.europa.eu The revised EU ETS targets a 62% reduction in covered emissions by 2030 from 2005 levels. The cost burden is greatest for coal plants because of their higher emissions intensity. Gas plants emit less carbon, but their margins can also weaken when electricity prices do not offset fuel and allowance costs. Older open-cycle units with low utilization may face earlier closure without a formal retirement order in the Europe thermal power market.
Rapid Fall in Solar and Wind Power LCOE
Higher renewable output is reducing the role of thermal generation in the Europe thermal power market. The IEA expects coal-fired generation to fall by more than 20% in 2026 under normal weather conditions as renewable generation expands. Gas generation is moving from a baseload role toward balancing, reserve supply, and system stabilization. This change reduces utilization at plants that were financed on the expectation of more regular wholesale generation. The Industrial Emissions Directive entered into force in August 2024, and member states were required to transpose it by July 1, 2026. Stricter emissions requirements, cooling-water constraints, and coastal permitting needs can raise costs for older plants and delay some replacement projects.
*Our forecasts treat driver/restraint impacts as directional, not additive. The impact forecasts reflect baseline growth, mix effects, and variable interactions.
Segment Analysis
By Source Type: Natural Gas Consolidates as the Dominant Fuel
Natural gas held 51.9% of the market share by source type in 2025 and is forecast to grow at a 1.1% CAGR through 2031. Its position reflects new gas additions in Germany, Poland, Greece, and Ukraine, even as the overall installed base declines. Coal remains in structural decline as retirement policies and carbon costs weaken its economics. Germany and Poland continue to have major coal fleets, but their future capacity plans rely increasingly on replacement generation. Nuclear power remains relevant within the broader thermal classification because it uses a steam cycle for electricity generation. Oil and geothermal capacity represent a smaller part of the regional fleet and are most relevant in island systems and remote industrial locations.
Russia anchors a large share of gas-fired capacity and gives the source type a different role than in Western Europe. Gazprom states that its generation assets include large electric and thermal capacity through subsidiaries such as Mosenergo. In Russia, gas remains a major source of regular power and heat supply. In much of the EU, gas is increasingly used for flexibility as variable renewable capacity grows. This difference means that the Europe thermal power market contains both baseload-oriented gas fleets and flexible gas plants that operate around renewable output. The result is a source mix in which natural gas remains the core fuel, but its operating patterns vary substantially by country.
By Technology: CCGT Leads on Efficiency and Policy Alignment
CCGT held 33.2% of the market share in 2025 and is the fastest-growing technology, with the Europe thermal power market size for CCGT forecast to expand at a 2.6% CAGR through 2031. Combined-cycle plants offer higher efficiency than older steam-cycle units and are better suited to hydrogen-ready design requirements. Steam turbine plants remain a large installed base, especially where coal generation and older central power stations are concentrated. ICE plants serve distributed generation and island-grid applications where smaller scale and modular installation are important. CHP systems remain relevant in industrial facilities and district heating networks across Scandinavia, the Baltics, and Central Europe.
Germany's framework for new controllable capacity supports hydrogen-ready CCGT investment. Uniper received preliminary approval in April 2026 for an 890 MW hydrogen-ready unit at Staudinger. Larissa Thermoelectric selected AVAX in August 2026 for a 794 MW CCGT project in Greece that will use Mitsubishi Power technology. DTEK is advancing a 650 MW CCGT project at Burshtyn with GE Vernova. These projects show that the Europe thermal power industry is directing development activity toward combined-cycle capacity rather than legacy steam technology.
By Capacity: Large Plants Anchor Supply, Small Plants Gain Strategic Value
Plants above 1,000 MW held 35.6% of Europe thermal power market share in 2025. These assets include large combined heat and power stations, nuclear-adjacent gas capacity, and the remaining large coal plants. The 500-1,000 MW range is important for current CCGT projects in Poland, Germany, and Greece. Plants in the 100-500 MW range include industrial CHP and mid-merit gas facilities. Below 100 MW is the fastest-growing capacity band, with a forecast CAGR of 2.1% through 2031. Its growth reflects the need for on-site power where grid connections are delayed or constrained.
Data centers, logistics sites, and industrial parks are considering smaller generation units when connection queues extend for years. These projects can pair gas generation with CHP to supply electricity and useful heat. Centrica completed its acquisition of the 850 MW Severn CCGT power station in 2026, illustrating the continued value of large, efficient assets for established utilities. Large plants can compete for system-service and capacity revenues, while smaller assets can pursue location-specific supply contracts. The Europe thermal power market supports both approaches because the reliability needs of national grids and individual users are not the same. The Europe thermal power market capacity mix is therefore becoming more diverse even as total capacity falls.
By Application: Utility-Scale Anchors Volume, Distributed Segment Gains Ground
Utility-scale plants held 69.2% of the market share by application in 2025. These facilities include central power stations and larger combined heat and power assets that serve broad grid demand. Distributed thermal plants are forecast to grow at a 2.8% CAGR through 2031, the highest application-level rate. Industrial captive plants provide power and heat security for energy-intensive sectors such as chemicals, paper, and cement. Peaking plants operate for fewer hours than central stations, but can earn income from capacity mechanisms and ancillary services.
The growth of distributed thermal capacity follows concern about energy security and grid connection delays. Eurelectric expects EMEA data center capacity to increase from 21 GW to 34 GW by 2030. Gas-fired units near large loads can offer firm supply agreements when a network upgrade cannot be delivered quickly. The European Parliament has stated that dispatchable power remains important for stabilizing systems with high shares of variable renewable electricity. This makes the Europe thermal power industry relevant to a smaller group of users who place a high value on availability and direct control of supply. The application mix will continue to include large grid plants, industrial captive supply, distributed generation, and specialized peakers.
Geography Analysis
Russia held 29.3% of the market share in 2025. Its large central power and CHP fleet serves electricity and district heating demand, which limits the scope for rapid replacement. Russia's gas fleet remains important for regular generation rather than only renewable balancing. This operating structure supports the country’s leading regional capacity position.
Germany, the United Kingdom, and France are the principal markets within the Europe thermal power market. Germany’s coal output fell to a record low in 2025 while its 2026 policy framework provided for new hydrogen-ready capacity. The United Kingdom’s capacity market continues to support efficient CCGT assets, including the Severn plant acquired by Centrica in 2026. France uses gas generation mainly as a flexible source when hydro output is lower, or electricity exports are higher. NaTran reported that French CCGT consumption increased 6.8% in 2025 as the country moved toward the closure or conversion of its remaining coal sites.
The rest of Europe is forecast to grow at a 1.9% CAGR through 2031, making it the fastest-growing geographic segment of the Europe thermal power market. Poland is developing CCGT capacity in Gdańsk and replacing coal capacity at Kozienice. Greece’s Larissa project would add advanced combined-cycle capacity to Southeastern Europe. Ukraine is developing projects at Burshtyn and Poltava as part of power-system reconstruction. Coal exits, network requirements, and the availability of development funding are encouraging investment across Central, Eastern, and Southeastern Europe.
Competitive Landscape
The Europe thermal power market is moderately concentrated across the region and fragmented within individual countries. Engie, EDF, Enel, RWE, and E.ON operate assets across several European markets. Gazprom Energoholding is a major Russian operator through generating subsidiaries and a large installed asset base. The range of national fuel policies prevents a single competitive model from applying across Europe. Larger utilities have advantages in fuel procurement, trading, operations, and the ability to manage plants that run fewer hours.
TotalEnergies completed its 50/50 joint venture with EPH in 2026, combining LNG capabilities with more than 14 GW of CCGT gross capacity in Italy, the United Kingdom, Ireland, the Netherlands, and France. Centrica’s purchase of Severn strengthened its flexible generation portfolio in the United Kingdom. GE Vernova’s Kozienice equipment order shows continued demand for advanced CCGT technology in coal replacement projects. These moves show how operators, fuel suppliers, and equipment providers are positioning around flexible gas capacity. The Europe thermal power market is also creating opportunities for firms that can deliver hydrogen-ready plant designs and associated services.
Central and Southeastern Europe offer development opportunities where coal exits are approaching and domestic financing is more limited. EPH-affiliated businesses and CEZ have a regional presence that can support project development in these markets. The revised Industrial Emissions Directive applies to large combustion plants and raises the importance of emissions-control investment. Operators with lower-NOx systems and selective catalytic reduction may have an advantage when permits are renewed. Companies that delay environmental upgrades may face higher retrofit spending or earlier decisions to retire assets. The Europe thermal power industry is therefore separating between efficient, adaptable facilities and older plants with higher compliance exposure.
Europe Thermal Power Industry Leaders
ENGIE SA
Enel S.p.A.
RWE AG
Électricité de France (EDF)
E.ON SE
- *Disclaimer: Major Players sorted in no particular order
Recent Industry Developments
- August 2026: Larissa Thermoelectric S.A. in Greece selected AVAX as general contractor for a 794 MW combined-cycle power plant in the Larissa Industrial Area. The project will deploy Mitsubishi Power's M701JAC advanced technology, the first such installation in Europe, with FID targeted before end-2026 and construction expected to be completed within 3 years. Shareholders include Clavenia at 38.5%, Sirec Energy at 16.5%, Volton at 10%, and DEPA Commercial at 35%.
- July 2026: Germany's Bundestag approved the Electricity Supply Security and Capacity Act, authorizing tenders for 11 GW of new hydrogen-ready capacity. Capacity must enter service by end-2031, and all plants are required to transition to hydrogen or another emission-free fuel by 2045.
- April 2026: TotalEnergies completed its 50/50 joint venture with EPH, creating TTEP to operate a portfolio of more than 14 GW of flexible power-generation assets across Western Europe, including a major CCGT portfolio in Italy.
- April 2026: Uniper received preliminary approval for an 890 MW hydrogen-ready CCGT unit at the Staudinger power station in Großkrotzenburg, Germany. The second partial permit for construction is scheduled for Q2 2027, and the project is part of Uniper's broader transformation of the Staudinger site into an energy hub.
Europe Thermal Power Market Report Scope
The Europe thermal power market covers electricity and heat generation using thermal energy across European countries. It includes power plants that convert heat from energy sources such as coal, natural gas, oil, nuclear fuel, biomass, and other combustible fuels into electricity, typically through steam turbines, gas turbines, combined-cycle systems, or internal combustion engines.
The Europe Thermal Power Market is segmented by source type, technology, capacity, application, and geography. By source type, the market is segmented into coal, natural gas, oil, nuclear, and other sources. By technology, the market is segmented into steam turbine, combined-cycle gas turbine (CCGT), internal combustion engine (ICE), combined heat and power (CHP), and other technologies. By capacity, the market is segmented into below 100 MW, 100–500 MW, 500–1,000 MW, and above 1,000 MW. By application, the market is segmented into utility-scale, industrial captive, distributed, and peaker plants. For each segment, the market sizing and forecasts have been provided on the basis of volume (GW).
By Source Type
| Coal |
| Natural Gas |
| Oil |
| Nuclear |
| Others (geothermal, etc.) |
By Technology
| Steam turbine Power Plant |
| Combined Cycle Gas Turbine (CCGT) |
| Internal Combustion Engine (ICE) Power Plants |
| Cogeneration / Combined Heat and Power (CHP) Plants |
| Others (CSP, Open Cycle, etc.) |
By Capacity
| Below 100 MW |
| 100-500 MW |
| 500-1000 MW |
| Above 1000 MW |
By Application
| Utility-Scale Thermal Plants |
| Industrial Captive Power Plants |
| Distributed Thermal Plants |
| Peaker Plants |
By Geography
| United Kingdom |
| Germany |
| France |
| Russia |
| Rest of Europe |
| By Source Type | Coal |
| Natural Gas | |
| Oil | |
| Nuclear | |
| Others (geothermal, etc.) | |
| By Technology | Steam turbine Power Plant |
| Combined Cycle Gas Turbine (CCGT) | |
| Internal Combustion Engine (ICE) Power Plants | |
| Cogeneration / Combined Heat and Power (CHP) Plants | |
| Others (CSP, Open Cycle, etc.) | |
| By Capacity | Below 100 MW |
| 100-500 MW | |
| 500-1000 MW | |
| Above 1000 MW | |
| By Application | Utility-Scale Thermal Plants |
| Industrial Captive Power Plants | |
| Distributed Thermal Plants | |
| Peaker Plants | |
| By Geography | United Kingdom |
| Germany | |
| France | |
| Russia | |
| Rest of Europe |
Key Questions Answered in the Report
What is the Europe thermal power market size forecast through 2031?
The Europe thermal power market size is expected to decline from 605.52 GW in 2026 to 567.56 GW by 2031, at a negative CAGR of 1.29%.
Which fuel source holds the largest share of thermal power capacity in Europe?
Natural gas led by source type with 51.9% of the market share in 2025 and is forecast to grow at a 1.1% CAGR through 2031.
Why are CCGT plants attracting new investment in Europe?
CCGT plants are efficient, can support renewable-heavy grids, and are being developed with hydrogen-ready designs under national capacity programs.
Which application is growing fastest through 2031?
Distributed thermal plants are forecast to grow at a 2.8% CAGR, supported by demand for firm on-site power near industrial and data center loads.
Which geographic area is growing fastest?
Rest of Europe is forecast to grow at a 1.9% CAGR through 2031 as Poland, Greece, and Ukraine advance CCGT projects.
How do EU carbon prices affect thermal generators?
Higher allowance prices increase operating costs, especially for coal plants, and can weaken margins for older gas units with low utilization.
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