FRANKFURT/DUESSELDORF (Reuters) - Vattenfall is considering converting its German coal-fired power stations to use fuels including gas or biomass as utility companies in the country brace for a government deadline for phasing out coal altogether.
The end of coal is the latest major challenge power firms face in Germany, whose energy transformation, or “Energiewende”, has already included a rushed exit from nuclear power and a costly expansion of solar and wind capacity.
Vattenfall corporate.vattenfall.com, owned by the Swedish state, operates 2.9 gigawatts (GW) of coal-fired power stations in Germany, including the 1.7 GW Moorburg site that only opened three years ago and supplies 80 percent of Hamburg's electricity.
The way German power station operators deal with their coal assets is crucial for investors, jittery ahead of a December announcement from a government-appointed commission about how coal plants will be phased out of Europe’s largest economy.
“How long Moorburg will run significantly depends on what the coal commission decides,” Vattenfall board member Tuomo Hatakka told Reuters.
“We will also examine alternatives for how to shape Moorburg’s future, for example through the use of biomass. We are at a very early stage in this process.”
German rivals EnBW, RWE and Uniper, have also started to retrofit coal plants for biomass or gas, or are considering such steps to soften the hit to earnings a shutdown of the power stations would entail.
DROP IN CAPACITY
An accelerated shutdown of Moorburg would be a major blow to Vattenfall, which spent 2.8 billion euros ($3.2 billion) on the plant. Converting coal-fired plants to fuels such as gas or biomass would also lead to marked drop in generating capacity.
Hatakka also said Vattenfall was planning to shut its Reuter West and Moabit coal-fired stations no later than 2030 and partially replace them with industrial waste heat, waste burning, biomass, power-to-heat and gas technology.
Shutting coal plants will be the third major shift for power companies in a decade. They scrambled to cope with a state-ordered expansion of renewable energy and then faced the sudden decision to stop nuclear power after Japan’s Fukushima disaster.
As a result of the policy changes, German electricity consumers now stump up more than 20 billion euros a year to subsidise solar and wind power, while utilities had to write off billions of euros from their nuclear stations.
Berlin later had to compensate them for the forced closures.
"I don't believe that wind turbines and solar modules will be enough to generate power in the future," said Georg Oehm, chair of the administrative board of the 53 million euro Mellinckrodt www.mellinckrodt.com/en equity fund.
In 2017, cheap nuclear power accounted for just 12 percent of Germany’s power production, down from 22 percent a decade ago. Meanwhile, the share of renewables in the energy mix more than doubled to a third last year.
Germany aims to raise that to 65 percent by 2030 to help cut carbon dioxide emissions and achieve its climate commitments.
Britain and Spain, in contrast, have taken a more measured and less costly approach to expanding renewable energy and kept nuclear plants on line to provide cheap energy, EU data shows.