Key Findings
STEAG’s 2023 sustainability commitment to phase out its German coal-fired power generation by mid-2026, well ahead of the national target, has been thrown into doubt by its sale to a private equity investor.
The buyer has given no explicit commitment to uphold STEAG’s coal phase-out plan, which could see the utility burning coal beyond 2030.
IEEFA calls for a reassessment of STEAG’s sale process, or at the minimum a more responsible sale to a buyer who is committed to implementing STEAG's coal exit plan.
Executive Summary
This paper updates our previous study (published 1 June 2023) regarding the case of German 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.
Despite being awarded decommissioning auctions 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.
Last year, the company was split into two entities: Iqony GmbH, a branch dedicated to renewables and grid investments, and STEAG Power GmbH, which hosts all the legacy coal generation assets. Both are subsidiaries of STEAG GmbH.
In May 2023, the company published its Sustainability Report 2023, which included a 2040 net zero target and a commitment to phase out coal at its German power plants by mid-2026. However, it is not apparent that the coal phase-out target will be adhered to once STEAG has been sold to a new owner.
The company has been losing money for most of the past decade. The six German 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.
Last month, it was announced that Asterion Industrial Partners, a private infrastructure investor headquartered in Madrid, Spain, would buy the company for approximately €2.6 billion, with the transaction expected to close by the end of 2023. In the press release, Asterion stated its commitment to the 2040 target, but said nothing about a timeline for coal phase-out, only stating it “supports the German government’s plans to phase out coal.”
It is of great concern that the new buyer will not follow STEAG’s coal phase-out target and will maximise the coal fleet lifetime until each plant has been compulsorily decommissioned by the Federal Network Agency, which could mean STEAG’s German hard coal phase-out is not completed until 2034, according to current estimates.
The goal of this paper is to call for a reassessment of the company’s sale or raise awareness for a responsible sale that includes a public commitment to implement STEAG's coal exit target.
