VKU: Investment in Municipal Power Plants Drops by 22% to EUR 4.87 Billion in 2013

Investment in new municipal power plants dropped by 22% to EUR 4.87 billion in 2013 (2012: EUR 6.24 billion) and was even 44% down compared with 2012, a survey by the Association of German Municipal Enterprises (VKU) showed.

 „The situation is critical. Compared with 2010 full-load hours for state-of-the-art gas-fired power plants declined by more than 30% in 2013. It is evident that hardly any investments are being made under these circumstances”, Hans-Joachim Reck, managing director of VKU said.

Under the recently amended Renewable Energy Sources Act (EEG 2014) renewable energy sources continue to enjoy feed-in priority into the grids and receive financial support (primarily market premiums paid in addition to the sale of renewable energy (so-called direct marketing), feed-in tariffs are only paid in certain limited cases for new plants under the EEG 2014). In the past EEG aid was even more generous, triggering renewable growth that let the share of renewables in the gross electricity consumption rise to 25.4% in 2013.

VKU points out the due to the many renewable power plants conventional power plants are needed less to generate power, but more and more (only) to provide operating reserve in case wind and solar power are not available. Providing secure back-up power becomes increasing important, yet there is little investment in modern, flexible power plants, VKU data show. Mr Reck therefore called for a capacity market (which would remunerate operators for providing flexible capacity), saying it was an insurance for the security of supply. Regarding the capacity market discussion, please see the links below, in particular the first link to a post on the latest studies presented by the Federal Ministry for Economic Affairs and Energy and further steps.

Despite the difficult market environment German municipal utilities managed to increase power plant capacity by almost 11% to 22.6 GW in 2013 (2012: 20.4 GW). This equals 12.3% of the total installed German power plants capacity of 183.5 GW published by the Federal Network Agency in the monitoring report VKU says (2012: 11.7% share). The increase mainly comes from growth of renewable power plants and CHP plants. The renewable power plant share in the energy mix of municipal utilities rose from 11.4% to 13.5%, with the installed capacity rising by about 3,000 MW or 32% in 2013 compared with 2012. Compared with 2011 the increase even amounted to 78%. The CHP capacity share rose from 43.5% to 44.4%, accounting for 33% of municipal generation.

“Municipal utilities rely on power for the energy transition: CHP, modern, highly flexible power plants and renewable power. Municipal CHP plants and modern, highly flexible power plants generate the power needed to balance the fluctuating input of renewable power and provide for a secure supply”, Hans-Jürgen Reck said.

In 2013 power plant capacity of 2.724 MW was under construction respectively undergoing the permitting procedure, with 36.2% being CHP plants and 37.6% renewable power plants.

Source: VKU

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