Back to black? Germany’s coal-fired power plan hits snags

An aerial view shows coal at a dry bulk terminal at the German port of Rheinberg-Orsoy along Europe’s most important shipping route, the Rhine, in Rheinberg, near Duisburg, Germany, April 6, 2022 Photo taken with a drone. REUTERS/Stephane Nitschke

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  • Germany aims to cover 1% to 2% of gas consumption via coal
  • Only 1 of 16 coal-fired power plants registered for reactivation
  • Low water levels and congested railroads hamper coal transportation
  • High coal prices strain operators’ liquidity

BERLIN, July 26 (Reuters) – High coal prices, supply bottlenecks and aging power plants pose a challenge to Germany’s plan to increase electricity generation from coal-fired power plants to compensate lower gas deliveries, according to operators and industry experts.

Earlier this month, Germany agreed to allow coal-fired power plants to be reactivated or their lives extended as it prepares for dwindling Russian gas supplies. Gas accounts for around 6% of the country’s electricity production. Read more

According to rough estimates, this decision could offset 1 to 2% of Germany’s gas consumption, but energy operators have either refused to reactivate the plants or encountered difficulties in acquiring the necessary coal.

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Germany’s energy regulator told Reuters that operators had so far notified it of the reconnection of just one of the 16 coal-fired power plants that Berlin hopes to see reactivated.

The Economy Ministry said it was in talks with operators and associations and was closely monitoring the coal power situation.

Half of the 16 coal-fired power plants on the government’s list for reactivation or expansion are operated by utility EnBW (EBKG.DE) in southern Germany, but the company said the plants could not be reconnected to the network because of their age.

EnBW will, however, extend the life of a plant that was due to close in October, he said.

Uniper (UN01.DE), which has factories on the government list, said it had not yet decided on possible reactivations, while chemical group Evonik (EVKn.DE) said it would postpone in operation a factory in the western town of Marl, but only in autumn.

“We hired staff, bought coal on the global market and provided technical maintenance,” an Evonik spokesperson said.

Coal producer Steag plans to reactivate its plants but is facing supply issues as the coal required would place a ‘significant burden’ on the company’s cash, a spokesman said, adding it would cost around one million euros in three figures.

Rising electricity prices are prompting energy operators to consider switching back to coal, but coal prices have risen sharply and companies have to pay up front for supplies.

Inland waterway navigation has been hampered by low water levels forcing ships to carry only half their capacity, and grain shipments from Ukraine are straining the rail network, Reuters said. Reuters the German association of coal importers.

The association said bottlenecks in coal transportation would increase, particularly from September, when monthly import volumes are expected to increase significantly.

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Reporting by Markus Wacket and Matthias Inverardi Writing by Riham Alkousaa Editing by Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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