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Coal-fired generation falls with plant changes and hydro

21 Nov 2013 17:51:24 | edcm

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Power generation from coal across key European-headquartered utility firms fell year on year due to the closure of dirtier plants and a rise in renewable production, which suggests lower demand for carbon permits from power companies to comply with the EU emissions trading scheme (ETS).

German energy companies RWE and E.ON and Spain’s Endesa in their Q1-Q3 2013 results published in November registered a combined decline in both hard coal and lignite-fired generation over the first nine months of this year.

Coal and lignite-fired generation for all three utilities combined fell to 167TWh, down 9.9% year on year from January to September. RWE and E.ON’s generation figures cover Europe, with RWE’s also capturing Turkey. E.ON’s hard coal use rose in Germany year on year, but this did not reflect the wider trend across Europe. Endesa’s figures refer to the utility’s activity solely in Spain and Portugal, while SSE’s coal-fired production in the UK and Ireland fell by 32% year on year over the period from April to September – one of the largest declines of the European utilities.

Total generation across all power types also decreased for all three – by 6.4% to total 392TWh – but the fall from coal-fired sources was more marked (see graphs).

“Whenever there is less coal production, there is less need for carbon permits”, said Ingo Tschach, head of market analysis at ICIS carbon analysts Tschach Solutions on Wednesday.

Germany’s lignite efficiency rises

Utilities cited the closure – either whole or partial – of plants as one of the primary reasons for the decline from coal-fired sources.

In fact, plant efficiency growth was such that lignite consumption at German power plants declined 1.8% year on year to 121m tonnes for Q1-Q3, but lignite-fired power generation rose 3.3% increase to 108.1TWh over the same period, German lignite association Debriv said on Thursday.

Both Germany’s RWE and Sweden-based Vattenfall inaugurated new lignite plants in Germany at the end of 2012, which the utilities say are 30% more efficient than old plants.

RWE replaced 10 old lignite units with a combined capacity of 1.3GW with the new 2.1GW Neurath double block units which came online in August last year. The BoA 2&3 blocks would save 6m tonnes of CO2 emissions a year at equal power generation volumes, RWE says on its website.

Vattenfall’s new 675MW Boxberg plant started commercial operations in October 2012.

Plant closures and hydro elsewhere

Elsewhere, coal-based Didcot A in the UK – with an installed capacity of 1,958MW – closed in March.

EON reduced its coal-fired generation in UK by shutting its Kingsnorth power station and converting another plant, Ironbridge, to biomass at the end of 2012.

In the future, thermal generation will continue to be pressured by environmental regulations such as the Industrial Emissions Directive (IED), the UK’s carbon floor price and utilities now having to buy all their carbon permits for the EU ETS, said SSE in its quarterly results.

Several utilities cited rising emissions costs year on year in their Q1-Q3 results, including RWE ( see EDEM 14 November 2013 ) and SSE and E.ON ( see EDEM 13 November 2013 ). However, much of the cost increase was due to the end of free emissions allowances from phase II.

However, Endesa’s emissions costs bucked the trend, with falling emmissions costs ( see EDEM 6 November 2013 ). The Spanish utility said that thermal generation played less of a role in its energy mix in Spain and Portugal as high rainfall levels led to an increase in hydroelectricity’s share of the Spanish power market. Ben Lee and Martin Degen

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