Germany awards coal closure compensation to Uniper, EPH for 1.5 GW

London — Germany's second coal closure compensation auction was oversubscribed with three bids for 1.514 GW of capacity awarded, regulator BNetzA said April 1.

Uniper's 757 MW Wilhemshaven, EPH's 690 MW Mehrum and a small 67 MW lignite-fired unit at Deuben are set to shut, it said.

The three successful bids were in a range of zero to Eur59,000/MW, it added.

"The highest awarded bid was significantly below the maximum bid [Eur155,000/MW]," BNetzA President Jochen Homann said.

The first round in late 2020 saw some Eur317 million in compensation awarded for 4.8 GW of coal-fired capacity to exit the market by December 2020, including Vattenfall's 1.6 GW Hamburg-Moorburg, RWE's 764 MW Westfalen and 794 MW Ibberbuerren and Uniper's 875 MW Heyden units.

The third round this April will see a further 2.5 GW of coal closure compensation tendered to reduce capacity to the 15 GW of remaining capacity target by end-2022.

Both Wilhemshaven and Mehrum are located in North Germany unlikely to cause grid security issues that would require plants to remain available outside the market for grid operators.

Coal burning at the awarded units has to stop by Dec. 8 the latest, BNetzA said.

Like Moorburg and Walsum in the first round, the Wilhelmshaven and Mehrum sites got future plans for potential hydrogen projects.

Uniper in July 2020 signed an MoU with steel maker Salzgitter and Rhenus to explore sponge iron production at the Wihelmshaven site, which was planned to close by end-2022.

In a statement on April 1 Uniper said it was to focus on hydrogen for the regeneration of the site.

"Our Wilhelmshaven site offers excellent opportunities to remain an important industrial site even after coal-fired electricity generation has ceased," Uniper COO David Bryson said adding that hydrogen and green gases were to play a central role in this shift.

The H 2 Mehrum consortium also plans to explore the potential for hydrogen production by summer 2021, it said previously.

Both plants were commissioned in the late 1970s, unlike Moorburg and Westfalen in round 1, which only started operating in the mid-2010s.

GERMAN COAL CLOSURE COMPENSATION AUCTIONS

Source: BNetzA