29.11.2012
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Coal power

DIW says three strikes against coal in Germany

Germany's premier economics institute takes a look at the future of power from lignite in terms of profitability, suitability for the country's future energy supply, and the environment. On all three counts, the researchers say brown coal has no future, and the last units will probably be closed "around 2040/45."

Increasingly, international onlookers concerned about climate change – and sometimes not completely familiar with the debate in Germany, perhaps for an inability to speak the language – charge that Germany is switching from nuclear to coal. Renewables International has repeatedly discussed the matter, most recently with reference to data from Germany's Energy Agency (Dena).

Other data, however, can seem to suggest the opposite. For instance, a British blogger found "official statistics" from Germany's Network Agency for "power stations the German government says are being built and decommissioned between now and 2015." These figures seem to indicate that Germany is taking down 1.8 GW of coal plants and building 8 GW.

Those of us who have followed events closely over the past few years know, first, that we are currently witnessing a major shift away from coal plants. The data from just three years ago look a lot worse; for several reasons, coal briefly looked like a cheap source of electricity, but the situation is changing. And second, renewable power is increasingly cutting into the medium load now that the peak load has been nearly wiped out entirely, so an increase in installed capacity can no longer be equated with an increase in kilowatt-hours generated.

DIW says “no future”

Now, DIW, Germany's premier economics institute, has published the latest installment of its Policy Advice Compact series; see #69, which is in German but has an English summary starting on page 6. Their findings are devastating for the future of brown coal in Germany.

But first, we must understand why the study focuses on lignite rather than coal power in general. The reason is basically that Germany no longer has hard coal (anthracite) at competitive prices; it is far cheaper for Germany to import hard coal than to produce it domestically. So the focus for domestic coal mining is on brown coal (lignite), which Germany – unfortunately for the environment – has in abundance quantities, with some estimates suggesting that the country could continue consuming lignite at the current level for up to 200 years.

DIW agrees that this will not happen. Indeed, one sentence in the Executive Summary cannot be underscored enough for international readers:

"While there is broad consensus that natural gas fueled plants are flexible backup capacities, and that new investment is unlikely to take place in hard coal power plants, the future of the lignite system is even more uncertain."

Renewables International has stated many times that the debate taking place in German assumes that the country will have to switch to natural gas for the interim, with the current slight shift to coal power representing an unplanned and undesired effect of the irresponsible sudden shutdown of 40 percent of the country's nuclear capacity in 2011. One of the most unfortunate effects of this fundamental overnight change in power supply is the unnecessary challenge that Germany now faces for backup power.

But back to DIW – economically, the researchers say that "high capital costs, decreasing full load hours" and future carbon prices will mean that natural gas plants will go up in Germany "with not a single lignite plant built."

 - In a previous study, DIW showed how power from natgas, which is largely imported, is more expensive than coal power in Germany, which has tremedous domestic lignite resources.
In a previous study, DIW showed how power from natgas, which is largely imported, is more expensive than coal power in Germany, which has tremedous domestic lignite resources.
DIW

In terms of grid stability, lignite is available in eastern Germany (around Leipzig and Dresden) and along the Rhine, but not in southern Germany, where a number of nuclear plants have been and will be shut down. Interestingly, the study says that lignite plants would therefore "not benefit from regionally differentiated capacity payments," which seems to indicate that there is now talk about such capacity payments at a high level.

Finally, and unsurprisingly, DIW finds that, because lignite entails carbon emissions nearly 3 times the level of natural gas ("almost 1 t/MWh” vs. “~ 350 kg/MWh” for natural gas), the only options would be CCS (carbon capture & storage), which is basically dead in the water in Germany.

What does this mean?

Three strikes, and you're out – if it were only so easy. The fact remains that renewables are currently mainly offsetting natural gas in power supply, so something needs to be done. Primarily, we need to lower the ceiling for emissions trading (= a higher carbon price) to make electricity from natural gas more profitable than coal power.

Along with the sudden removal of so much nuclear capacity, photovoltaics continues to be built twice as fast as the government's target of no more than 3.5 gigawatts per year. These two factors mean that the German power market needs to be restructured, which is where the debate about capacity markets comes in. We are not there yet, and Germany can still screw things up if it's not careful. So it's good that we keep revisiting this issue and holding the Merkel coalition's feet to the fire – which, hopefully, is not fueled with coal. (Craig Morris)

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2 Comments on "DIW says three strikes against coal in Germany "

  1. jmdesp - 07.12.2012, 15:13 Uhr (Report comment)

    It may cause problem to base-load also indeed. But I doubt this is a reason to rejoice. As far as I see it, this means Germany will need to subsidy it's fossil power because of the market distortions brought by subsided renewable. Either pay for capacity, or pay enough for each generated KWh that's it's still profitable to run it only part of the year.
    Also the improvements that are brought to coal according to this article http://www.spiegel.de/international/germany/new-coal-fired-plants-could-be-key-to-german-energy-revolution-a-854335.html could change the game, if it's now able to do load following efficiently.
    Finally whatever happens, getting energy from solar in winter in Germany will alway be very hard, and transposing the result in Mai to the whole year is inadequate. I was in Berlin a few days ago, and was shocked by the fact that it was almost completely dark already at 4PM. Eex confirms that, 4PM production of yesterday was already down to 150 MW from 3GW at 12AM. Which by the way is about 10 times less than what the current capacity can generate in Mai.

  2. Dimitar Mirchev - 29.11.2012, 15:06 Uhr (Report comment)

    "The fact remains that renewables are currently mainly offsetting natural gas in power supply, so something needs to be done."
    I think that this is because renewables havent really began to eat the share of the base-load power plants as can be seen in "Electricity production from solar and wind in Germany in 2012" by Fraunhofer ISE.
    I believe that adding 10-20 GWp (2-3 years) will force more base-load to closure and after 5-6 years (2017-2018) Germany PV will produces more electricity than the demand during mid-day hours. 60-70 GWp including self-consumption is not that far away. This will make base-load obsolete. Especially nuclear.

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