GETEC’s 800MW German coal plant project cancelled

Energy company GETEC Energie has cancelled its plans to build a 800MW coal-fired power plant Gemeinschaftswerk in Germany.

The project Gemeinschaftswerk does not exist anymore, an executive secretary of the German company, which focuses on energy services, told ICIS last week. She declined to give further comments.

Whereas almost all large gas power plant projects have been cancelled in Germany recently due to low wholesale power prices and regulatory uncertainty (see EDEM 21 November 2014), the cancellation of coal power plant projects are much less common because the cost of generating electricity from coal is lower compared to gas.

This is reflected in clean dark and spark spreads, the measures of coal and gas power plant profitability that take into account the cost of carbon emissions. Even inefficient coal power plants have positive clean dark spreads for the next few years, whereas clean spark spreads are negative, even for highly efficient gas power plants.

For example, on 19 December, German Calendar Year 2017 clean dark spread for coal power plants with 35% efficiency was €2.68/MWh. The same spread for coal power plants with 40% efficiency stood at €6.44/MWh, according to ICIS data. At the same time, German Cal ‘17 clean spark spread for gas plants with 52.11% efficiency was -€12.05/MWh. The Cal ‘17 clean peak spark spread stood at -€2.98/MWh, indicating that gas power plants generate at loss even during peak hours when power prices are higher.

Several large coal power plants are due to come on line in the next few years (see EDEM 27 November 2014). However, the German government recently decided that the power sector cut 22m tonnes of CO2 emissions by 2020 has introduced some uncertainty for coal power plants. It is expected that the government’s decision will force 5-10GW of power generation capacity off line (see EDEM 03 December 2014). The majority of that capacity is likely to be coal-fired, because coal power plants are more carbon intensive. Laura Raus