Süddeutsche Zeitung: Utilities Plan to Shut Down Many Unprofitable Conventional Power Plants

Due to the renewable energy regime in Germany, several German utilities are considering to close dozens of conventional power plants, citing a lack of profitability, Süddeutsche Zeitung (SZ) writes. Even nuclear power plants could be shut down prematurely, the paper says.

Officially the regulator, the Federal Network Agency (BNetzA), had received 15 applicants for closures of conventional power plants up until the middle of July, but this was likely only the beginning, Süddeutsche Zeitung says. The paper quotes the CEO of an unnamed utility according to whom 20% of the roughly 90,000 MW of conventional capacity in Germany were under review. (For information on power plant capacity in Germany published by BNetzA in March, please see here).

The companies blame the growing amount of renewable energy fed into the German grids that sends down electricity prices at the electricity exchange so that the production costs of conventional power plants cannot be recovered, SZ says. Pursuant to the Renewable Energy Sources Act (EEG) renewable energy has to be purchased and transmitted with priority by the grid operators, who sell the electricity via the European Energy Exchange EEX (with the exception of directly marketed renewable energy). In June the four transmission system operators only averaged 27.63 EUR/MWh for the sale of renewable energy, as prices for electricity had fallen to that point. This has rendered the operation of many conventional power plants economically unattractive. At the same time they are much needed to balance the grids. Hence a discussion about a new “market design” providing incentives for conventional power plants has been going on in Germany for some time.

As SZ points out, the closures may threaten the security of supply. Concerns for the security of supply exist particularly in Southern Germany. In April this year E.ON, the main operator of the modern gas-fired power plants Irsching 4 and 5 near Ingolstadt, agreed with the transmission operator Tennet not to close down the plants in the coming years for grid security reasons (for more information, please see here). In early July, EnBW AG said it had informed BNetzA and the four German transmission operators (TSOs) of its intention to shut down four power plant units with a total output of 668 MW at its power plant locations in Marbach and Walheim in Southern Germany. According to a spokesperson, E.ON wants to close its 323 MW hard coal-fired power plant in Kiel in Northern Germany, which it jointly owns and operates with the municipal utility Stadtwerke Kiel, at the end of 2015, SZ says, adding that RWE was also reviewing the profitability of power plants with a capacity of several thousand MW, yet final decisions had not been made.

Grid operators and BNetzA were concerned for the security of supply, SZ says. The paper quotes a spokeswoman of BNetzA as saying the agency could not accept further closures in Southern Germany.

Since an amendment of the Germany Energy Act (EnWG) in late 2012, there is the legal possibility of prohibiting the shut down of larger power plants.

Section 13a para. 1 EnWG stipulates that operators of plants generating or storing electricity with a rated power of 10 MW or more are required to inform the responsible transmission operator and BNetzA at least twelve months prior to a preliminary or permanent closure of power plants or parts thereof.  According to Section 13a para. 2 EnWG a permanent closure of  plants generating or storing electricity with a rated output of 50 MW or more is prohibited after the expiry of the period set out in Section 13a para. 1 EnWG if

  • the responsible TSO declares the plant “system-relevant”;
  • BNetzA approved this assessment;
  • and it is technically and legally possible to continue operations.

A plant is deemed “system-relevant” if it is sufficiently likely that a permanent closure would lead to a substantial danger for or an interference with the safety or reliability of the electricity supply system and cannot be overcome by other suitable measures.

In June the government passed the so-called Reservekraftwerksverordnung (Ordinance on Reserve Power Plants – ResKV), which further specifies the above provisions. It also set the requirements for an “appropriate remuneration” (cf. Section 11 paras. 2 to 4 ResKV).

Source: Süddeutsche Zeitung

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