Skip to main content

STEAG’s uncertain and slow decarbonisation strategy

June 01, 2023
Jonathan Bruegel
Download Full Report View Press Release

Key Findings

STEAG’s strategy for phasing out coal is so far non-existent,  raising the concern that the current 4.1 GW of coal-fired  generation will keep running until 2038—the new proposed  coal exit date according to the German Energiewende.

It is assumed that STEAG does not have any strategy for phasing out coal yet, and it remains uncertain whether a robust one will be released in spring 2023 as planned by company management.

The announced sale of the company confirms that the management decarbonisation strategy (yet to be stated) will be short-lived. The new buyer is expected to maximize the existing coal fleet lifetime.

Executive Summary

This paper presents the case of a German municipalities owned power utility, Steinkohlen Elektrizität AG (STEAG), whose generation is almost entirely coal-fired.

Since the 1930s, STEAG has been a coal-fired power producer from the industrial heartlands in Germany spread across the Nord Rhein Westphalia, Saarland, and Baden Württemberg regions. 

In the recent years STEAG has partially divested one thermal power plant in the Philippines. It still  owns and operates coal generation assets in Turkey and Colombia. Despite being awarded  decommissioning auction for three plants, only one German coal plant has been decommissioned so  far. As of today, STEAG is still operating 4.1 gigawatts (GW) of coal-fired capacity, with no  decommissioning dates planned. 

The company has recently split into two entities: ICONY GmbH, a branch dedicated to renewables and grid investments, and STEAG Power GmbH, which hosts all the legacy coal generation assets. 

The company is preparing a coal phase-out plan which has not yet been published. The phase-out strategy was initiated only in late 2022 and does not seem so far driven by specific decarbonisation  targets. 

The company has been losing money for most of the past decade. The six municipalities owning  STEAG put the company up for sale in late 2022, hoping to take advantage of a high-power price  environment that could make it more attractive to buyers. The sale process is expected to start in  May 2023. 

It is of great concern that the new buyer will not follow a coal phase-out strategy and will maximize  the coal fleet lifetime until being compulsorily decommissioned by the Federal Network Agency. 

The goal of this paper is to call for a reassessment of the company’s sale or raise awareness for a  responsible sale that implies a public commitment to implement STEAG's coal exit strategy.

Figure 1: STEAG Fleet by Technology (megawatts), Including ICONY Assets 

Figure 1: STEAG Fleet by Technology (megawatts), Including ICONY Assets

Source: Enerdata. 

The data above shows the large majority of STEAG fleet is coal-fired (4 GW). The solar development capacity falls under the ICONY portfolio (a separate entity from STEAG Power).

Read the full report: STEAG’s Uncertain and Slow Decarbonisation Strategy

Read the German version of the report: Ungewisse und zögerliche Dekarbonisierungsstrategie der STEAG

Jonathan Bruegel

Jonathan Bruegel is a power sector analyst for IEEFA’s Europe team. Before joining IEEFA, Jonathan worked more than 20 years in the energy sector and became an expert on power markets worldwide working for several power generation utilities.

His fields of expertise are conventional/renewable power generation, power storage, hydropower optimization, power market ancillary services, green hydrogen and LNG.

Go to Profile

Join our newsletter

Keep up to date with all the latest from IEEFA