Power plant projects on hold in Germany
German utilities association BDEW keeps a list of current power plant projects and says that practically everything is currently on hold. The problem is not permits, which continued to be granted. Rather, the new market conditions could make such investments unprofitable.
Germany is criticized for allegedly building new coal plants as a part of its energy transition, particularly as a result of the nuclear phaseout, with the general complaint being that Germany is in fact switching from nuclear to coal, not to renewables. Of course, the sudden nuclear phaseout of 2011 was irresponsibly quick; the power sector cannot respond to the shutdown of eight of 17 nuclear plants within a week.
Paradoxically, however, those who complain of this alleged switch from nuclear to coal also fail to understand that not a single coal plant going up this year can possibly be a reaction to the phaseout. It simply takes years – around five, if you want a ballpark figure – to build a coal plant, so any that go online this year are the result of planning completed around 2008, which puts us in a time before the economic crisis, before Germany's reaction to Fukushima, and even before current German coalition took office (though Merkel was still Chancellor in a different coalition at the time).
What's going on? As I have pointed out, emissions trading actually had the opposite effect of what was intended, with prices being so low last decade as to encourage investments in coal power. That situation has changed, however, though not so much because of emissions trading (which could still be made stricter); rather, the problem is now renewable power cutting into the medium load and, increasingly, the baseload. German economics institute DIW recently did the math and found that new coal capacity is no longer profitable.
The first coal-fired plants that can possibly go up as a result of the sudden nuclear phaseout of 2011 therefore should not be expected until 2016. But don't hold your breath. Last week, the BDEW spoke of a new "ice age" for power plant construction, with a third of all projects currently in limbo – regardless of whether they already have permits are not. The main reasons for coal power are the current market design, which no longer works, and public resistance to new coal plants.
The organization says that some 16,000 megawatts of new capacity should be installed by 2015, but "plans are few and far between starting in 2016" – exactly when the first new projects in reaction to the sudden nuclear phaseout of 2011 could begin.
The main problem is that Germany will continue to need a full 80 gigawatts of dispatchable capacity to cover peak demand on November evenings, when there may not be any wind – and there will never be any sunlight. The BDEW therefore says that the government should come up with a new market design by 2015 to ensure that the necessary investments continue to be made. The organization does not call for any particular policy, but capacity payments are a hot topic. No decision is expected before the fall elections, however, so it is unlikely that anything will be changed until 2014. (Craig Morris)