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Conventional capacity

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).

 - A former openface coal mine in Germany now transformed into a lake landscape.
A former openface coal mine in Germany now transformed into a lake landscape.
RAG Montan Immobilien

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)

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6 Comments on "Power plant projects on hold in Germany "

  1. heinbloed - 20.04.2013, 18:01 Uhr (Report comment)

    In my last comment here I reported from the EEX that the peak load prices are already below the base load prices - in Germany that was.
    Tomorrow (21/04/2013) they'll be below the base load price in Germany/Austria, in France and in Switzerland. See
    These countries are well connected via the grid, the expansion looming:
    With more and more decentralised RE at work the investors are giving up power production, putting their eggs into the subsidised energy distribution.
    What did Stalin say: Socialism is Lenin plus electricity ?
    The face of socialsm is hammered onto the coins of the capitalist with renewables all over, long time after all ............

  2. heinbloed - 14.04.2013, 16:39 Uhr (Report comment)

    The 13th of April and the 14th of April 2013 both saw peak-load prices below base-load prices in Germany. The first time in history we saw this phenomena in a 2 day consequence - as far as I know.
    http://www.eex.com/de/Marktdaten/Handelsdaten/Strom/Stundenkontrakte | Spotmarkt Stundenauktion/spot-hours-table/2013-04-15/PHELIX

  3. heinbloed - 14.04.2013, 16:33 Uhr (Report comment)

    From Australia:

  4. heinbloed - 13.04.2013, 17:43 Uhr (Report comment)

    Electricity storage in the free maket as a sole enterprise seems to be dead.
    There were huge hydro-storage plants being planned in Switzerland. Now these plans are put onto the back boiler, some cancelled all together.
    Storage was financed by pumping water when electricity was cheap (night-time, weekends) and running it through turbines when rates were high, at peak load times.
    With PV-power these peak loads are becoming more and more frequently cheaper than the base loads. A minimum difference of €0.03/kWh is needed to finance the large hydro power storage plants in Europe. And this difference is hardly seen anymore at the EEX (the European electricity exchange, http://www.eex.com/en/).
    Today for example the German peak load is cheaper than the base load, thanks to renewables containing PV-power.
    The Swiss Infosperber on the issue:
    The old hydro storage power plants can still make money, their investment is already paid. But for new ones there is no economical justification anymore, the amortisation won't be reached during their life time.
    "Those who come to late will be punished" the article about the hydro storage plants states.

  5. Photomofo - 11.04.2013, 23:48 Uhr (Report comment)

    Doesn't make any sense to build CSP anywhere. Unless you want to build a beautiful piece of industrial art they simply cost too much compared to PV. REC is talking about EURO per Watt PV projects. PV LCOEs are going to catch up with wind before too long. CSP cannot compete. How much longer are the CSP guys going to drag things out with all this we provide baseload and regulation nonsense? It's tiresome. There are much cheaper ways to regulate than CSP. Hydro traditionally but new gas and coal is highly rampable. GE and Siemens have been building higher ramp rate turbines for many years.

  6. James Wimberley - 11.04.2013, 21:17 Uhr (Report comment)

    Can you please do a post on capacity markets? Clearly these should create a level playing field between technologies : geothermal, electricity-to-electricity storage, electricity-to-gas conversion, and old-fashioned natural gas - once you have included a fair price for carbon and energy insecurity. Also, capacity markets should be European, given the routine character of large-scale imports and exports. For instance, one feasible despatchable technology is concentrating thermal solar with hot salt storage, but it makes more sense to buld these "lumpy" plants in Spain or Italy than in Germany.

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