Industry News
Germany undergoes a large-scale reversal to increase coal power generation in Europe
According to a decision announced by the German government on October 4th, the emergency measures to restart coal-fired power last year will be extended until the upcoming winter of this year - extending the approximately 1.9 million kilowatts of lignite power generation capacity added last year on top of the existing 45 million kilowatts of coal-fired power installed capacity. The German government stated: "The reactivation of coal-fired power reserves is to save on natural gas used for power generation, in order to address the natural gas supply bottleneck during the heating period of 2023/2024
Two Laws "Renew the Life" of Coal Fired Power Plants
In September 2022, the German government passed two decrees: one was to extend the operation time of a large coal-fired power plant until March 31, 2024, and the other was to allow another household appliance plant to provide 1.9 million kilowatts of lignite power generation installation.
According to Reuters data, driven by policies last year, 36.3% of the electricity in the German power grid came from coal-fired power plants from July to September 2022, compared to 31.9% in the same period in 2021. In order to support this transformation, Germany demands that Europe restore higher coal production.
Regarding this, The International Energy Agency (IEA) stated in its 2022 annual coal market report that: Under the threat of potential issues such as natural gas shortages, in order to ensure sufficient electricity, some closed coal power plants in Europe have re entered the market. In most countries, this involves very limited coal power production capacity, with only Germany experiencing a large-scale reversal, increasing the continent's coal power generation, and it is expected to maintain such high levels for a period of time
The German government announced the continuation of this policy in October this year, mainly to maintain energy prices at an appropriate level this winter and ensure that natural gas reserves do not significantly decrease. The International Energy Agency's 2023 coal market report will not be released until December of this year. However, some institutions believe that after the German government announced this news, the coal production statistics in Europe are likely to be similar to last year. According to the 2022 report of the International Energy Agency, it is predicted that Europe's coal production will not fall below the 2022 level until 2025.
Despite these predictions, the German government is still optimistic that Germany will achieve its goal of phasing out coal as scheduled.
Policy changes do not affect the transformation process
Germany's coal-fired power plants should have been phased out through coordination and gradual closure by all parties. In return, these plants will receive a government coal phaseout fund (totaling 40 billion euros).
On January 26, 2019, the German Coal Commission officially announced a consensus on the timetable for phasing out coal-fired power plants, and determined to end all coal-fired power operations by the end of 2038 at the latest. At that time, this was considered one of the most influential energy transformation decisions in the world. Shortly after, German Chancellor Schultz, at the beginning of taking office, also advanced his commitment to "returning coal" and raised the target year for the complete elimination of coal-fired power from 2038 to 2030.
According to data at the time, Germany's total electricity generation in 2030 was 680-750 terawatt hours, with 80% of its electricity coming from renewable energy sources. To achieve this goal, Germany should achieve 200 million kilowatts of photovoltaic installation and 30 million kilowatts of offshore wind power by 2030.
However, policy changes are always unexpected - the Mehrum coal-fired power plant, which was closed in 2021, was allowed to restart in September 2022. According to a report by Deutsche Welle, German Finance Minister Lindner stated that nuclear and coal-fired power plants are still needed in Europe's electricity structure. In 2022, German Chancellor Schultz authorized the restart of multiple coal-fired power plants.
For current Germany, there is only one goal to continue lignite power generation: to squeeze natural gas out of the electricity market during peak demand periods to maintain low prices. The restart of coal-fired power plants is expected to save 3.9 to 5.6 terawatt hours of natural gas power generation, and the electricity price can be reduced by 0.4 euros/megawatt hour to 2.8 euros/megawatt hour.
Environmental organizations believe that restarting coal-fired power to save natural gas will have a significant impact on the climate. The German government has announced that it will strive to assess the additional carbon emissions caused by coal fired power plants being on standby. The government emphasizes that "ideally, achieving the goal of 'returning coal' by 2030 will not be affected.
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