Janschwalde power plant to resume production after temporary shut-down of open-pit mine

This analysis has originally been published in an extended version for ICIS EU carbon subscribers on 10 Sep 2019 at 09:26 CET.

Main points

• After a court decision from 30 August, German power producer LEAG had to stop its lignite mining activities in the open-pit mine of Janschwalde
  • The mine had to enter safety mode as of 1 September as LEAG were unable to provide an environmental permit to officials
  • As for the court ruling, the deadline for handing in the permit was not extended beyond 31 August
  • In its press release, LEAG state that they do not expect the shutdown to last longer than 10-12 weeks, the time required to reobtain the environmental clearance
• LEAG officially confirmed to our team that power production in the Janschwalde power plant is unaffected by the shutdown
  • According to our source, the demand for lignite will be covered by other mines in the area
  • This provisional supply from other mines can be kept for the expected duration of the shutdown of 10-12 weeks, going along with higher marginal production costs due to increased transportation costs

Analysis

• After the shutdown of the mine, an at least partial reduction of the power production in the plant had been expected
• The statement indicates that production in other mines in the region can be ramped up sufficiently to cover for the supply shortage
  • LEAG is currently mining lignite in four mines in the region
    • Janschwalde (9.1m tonnes of lignite in 2018)
    • Welzow-Süd (22.8m tonnes)
    • Nochten (16.3m tonnes)
    • Reichwalde (13.5m tonnes)
  • According to LEAG, even before the shutdown the Janschwalde power plant had been partially supplied by Welzow-Süd and Reichwalde
  • This and the fact that Jänschwalde is the smallest of the mines currently under LEAG operation, supports LEAG’s statement that the company will be able to supply the power plant from other mines for a certain period
• Marginal costs for power production in the plant will increase due to increased transportation costs
  • However, because of the generally low marginal costs of lignite generation, we do not expect to see fuel switch from lignite to other less carbon intensive sources as long as lignite is sufficiently supplied

Sebastian Rilling is Student Analyst – EU Power & Carbon Analytics. He can be reached at eu-carbon@icis.com

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