New coal-fired generation weighs in on German power curve
While Germany’s likely new coalition government struggles to reinvent its renewable energy policy amid depressed power prices, the country is about to increase its coal-fired power plant fleet by 4GW in the next six months.
Between 2006 and 2008, construction of eight hard coal-fired power plants with about 7.5GW of new capacity began in Germany. Out of these, Trianel’s 750MW Lunen coal-fired plant in North Rhine-Westphalia was the first to start up on Wednesday. Most of the remaining plants will follow in first half of 2014 (see table), but energy company STEAG’s 725MW coal-fired plant Walsum 10 is expected to start commercial operation before the year’s end.
Vattenfall’s Moorburg hard coal-fired units A and B, at 830MW each, will come online in the second half of 2014. The start up was pushed from Q2 to Q3 2014. E.ON’s 1.1GW coal CHP plant Datteln 4 remains mired in legal action and is unlikely to come online in 2014, according to an E.ON spokesman.
The new thermal capacity, in addition to growing renewable energy generation capacity, is weighing on the far curve with backwardation visible in the spread between the German Calendar Year 2014 and 2015 Baseload contracts. On 4 December Cal ’15 had a €0.575/MWh discount over Cal ’14, ICIS data shows.
Germany is planning to phase out nine nuclear plants, with a combined capacity of 12.1GW, by 2022. The 1.3GW Grafenrheinfeld reactor is the next due offline at the end of 2015. But with the increase in thermal capacity, backwardation is also visible in on the Cal’ 16 to Cal’ 15 Baseload contracts spread.
Several market participants polled by ICIS do not see any upside to power prices before 2017, when more nuclear power plants are retired.
In a recent report, French bank Societe General said oversupply would keep a lid on German power prices, and neither lower supply nor demand surges were likely to happen. Sonja Caymaz
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