E.ON Informs Regulator of Plans to Shut Down Highly Efficient CCGT Irsching Power Plants – Legal Action Considered in Case of Prohibition

E.ON, HSE, Mainova, and N-ERGIE have announced that they informed the Federal Network Agency (BNetzA) of its plans to take the high-efficiency combined-cycle gas turbine (CCGT) power plants Irsching 4 and 5 offline effective 1 April 2016. The utilities said that the two CCGTs had no prospect of operating profitably when the current contract with the network operator expires in March 2016. They announced to consider legal action if the shutdown would be prohibited based on the Ordinance on Reserve Power Plants.

1. Reasons for Closing Down Irsching 4 and 5 Despite High Efficiency

The utilities stressed the high efficiency of the plants, with Irsching 5 that started operating in 2010 having a fuel-efficiency of 59.7% and Irsching 4 that is in operation since 2011 having an efficiency of 60.4%.

Due to the increase in subsidized renewables feed-in and low wholesale power prices, the units could, however, no longer supply power at market conditions profitably, they said. They reminded that the plants are operated under a contract brokered by BNetzA in 2013 (for more information, please see here), which “classifies costs according to whether the units operate to supply merchant power or whether they are dispatched by the network operator”.

In 2014 Irsching 4 and 5 did not supply merchant power at all and were only dispatched when they were needed to stabilize the network in southern Germany in response to temporary fluctuations (of renewable input), E.ON and the other utilities said, adding that the remuneration was based on general regulatory practice and “was just enough to cover the cost of operation”.

When the contract with the network operator expires, the two CCGTs would have to cover all their costs by supplying merchant power, which was impossible under the current conditions, the utilities said.

2. Legal Action Considered in Case of Prohibition of Shutdown

The utilities already announced to consider legal action if the shutdown of the plants would be prohibited pursuant to the Ordinance on Reserve Power Plants (Reservekraftwerksverordnung – ResKV), saying the ordinance was made having in mind older plants, but did not “recognize the significant costs faced by new plants, primarily depreciation charges and capital costs”.

According to Section 13a para. 2 EnWG (German Energy Act) a permanent closure of  plants generating or storing electricity with a rated output of 50 MW or more can be prohibited if

  • the responsible TSO declares the plant “system-relevant”;
  • BNetzA approves 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.

Pursuant to Section 13a para. 2 sent. 9 EnWG the closure can only be prohibited for a duration on 24 months. Remuneration for the period of continued operations is regulated by Section 13a para. 3 EnWG, according to which the operator receives the costs for keeping the plant operational (Erhaltungsauslagen), and further specified by Sections 6 and 12 ResKV.

Source: E.ON

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