August 5, 2020 Read More →

Germany launches first tender in country’s coal power phaseout

S&P Global Market Intelligence ($):

Germany has launched a first coal plant closure compensation tender for 4 GW of hard coal capacity, the country’s federal network agency, BNetzA, said Aug. 4, as part of the country’s phasing out of the fuel by 2038.

Germany’s coal exit law, approved by parliament July 3, calls for eight such tenders for closure compensation through to 2024, reducing hard coal capacity to 15 GW by end-2022 and to 8 GW in 2030.

The first tender has a bid ceiling of €165,000/MW. Should the tender be oversubscribed, compensation would be awarded to the lowest bidders per metric ton of avoided CO2. The tender closes Sept. 1 with results expected to be announced by December, allowing for plants to close this year. The next tender deadline is set for early January 2021.

“The tenders allow for a fast closure of hard coal plants without endangering security of supply,” BNetzA President Jochen Homann said.

A second fast-track tender is planned for January with compensation for a further 1.5 GW on offer. For the next six auctions, the regulator is to set the capacity volumes for closure between 2022 and 2027.

German hard coal capacity rose above 20 GW in May, with Uniper SE’s 1.1-GW Datteln 4 unit commissioned following delays since construction started a decade ago. Hard coal generation averaged only 3.7 GW in the first seven months of 2020, transmission system operator data shows, with hardly any units running this summer as generation margins declined due to rising EU CO2 prices. Output from hard coal plants has been falling sharply since 2016 and accounted for only 9% of German electricity in 2019, averaging below 6 GW.

[Andreas Franke]

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