Major 850MW German cogeneration power plant on hold

Austrian energy company OMV has put a major 850MW Haiming gas-fired combined heat and power (CHP) plant project on hold in southern Germany.

The company cited disappointing CHP reform proposals from the German government as the main reason for putting the project on ice, a spokeswoman confirmed. Adverse economic conditions also played a role, she added.

The plant was previously expected to come online between 2017 and 2019 (see EDEM 23 September 2014).

The decision to reconsider the economic viability of the project is just the latest in a long line of similar moves on the part of utilities, which have been forced to radically reform their power generation arms in light of shifting market dynamics, favouring short-term flexibility over long-term volume production.

If the newest, and by extension often the most efficient, CHP plants are unable to get of the ground due to poor economics, the depth of the problem facing older plants with higher maintenance bills becomes apparent.

The German government does plan to increase CHP subsidies against a backdrop of low wholesale electricity prices.

However, it has decided to focus the subsidies on keeping existing CHP plants online rather than funding the construction of new plants, because focusing on both would be too expensive for the public budget.

Last September, OMV had said it expected to make an investment decision for the plant this year.

But the spokeswoman said on Monday “it is now not known” when that decision will be taken.

CHP proposals

Last month, Germany’s economic affairs ministry said its CHP reform proposals could be published before the start of August (see EDEM 13 July 2015).

However, it now expects to publish them in September as part of one package, which will also include proposals for the new power market design, known as power market 2.0, and additional measures needed for achieving Germany’s 2020 climate targets, a ministry spokeswoman said on Monday.

The proposals will be followed by consultation with stakeholders and, following this, legislative proposals.

In light of this timeframe, the OMV spokeswoman said there could be more clarity regarding the future of the Haiming project by the end of the year. laura.raus@icis.com