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Germany to add 1 GW to second coal closure tender to offset Datteln

Highlights

1 GW Datteln 4 set to come online this summer

First 4 GW closure compensation auction 2020

Compensation only until 2026 in five auctions

London — Germany plans to auction an additional 1 GW of hard-coal closure compensation next year to offset start-up of Uniper's Datteln 4 coal plant coming online this summer, according to a new draft of the coal exit law leaked Tuesday and seen by S&P Global Platts.

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"To offset expected higher emissions [from Datteln 4 starting], the tender volume for closure target 2023 (auctioned in 2021) will be increased by 1 GW", the leaked document from the energy ministry said.

The draft notes an increase in the first auction for 4 GW of closure compensation planned this year would have reduced competition due to the technically limited potential for near-term coal closures.

Compensation for closures is to be awarded to bidders offering the lowest cost of avoided CO2 emissions.

Beyond 2026, no compensation is to be awarded for hard-coal closures.

According to the draft, grid regulator BNetzA is set to run the annual auctions and determine the exact volumes to be awarded.

The ministry is finalizing the coal exit law to cap lignite and hard coal capacity at 15 GW each by end-2022, falling to 8 GW for hard-coal and 9 GW for lignite by 2030.

The latest draft still does not specify a bid ceiling for the auctions with regional location and internal grid constraints also a factor.

Last week, the government and lignite operators agreed a timetable for the closure of 18 GW of lignite capacity over the next two decades to 2038 with lignite operator compensation limited to Eur4.8 billion.

Energy minister Peter Altmaier confirmed Tuesday that the coal exit law is set to pass cabinet this month.

Passage last year was delayed by the inclusion of controversial changes to wind regulation now to be dealt with by a separate law.

The latest draft includes details for extending support for a switch to gas for coal plant operators with CHP subsidies extended to 2029.

GERMAN COAL, NUCLEAR CLOSURE PLANS (GW)

2019 (av. output)
2020
2021
2022
2023
Hard-coal
5.6
21*
17
17
15
Lignite**
11.7
18
17.7
16.8
15
Nuclear***
8.1
8.2
8.2
4.1
0
Total
25.4
26.2
42.9
37.1
30

*includes Datteln 4, **Jan 2020 lignite phase-out timetable, ***2011 nuclear exit law

Source: S&P Global Platts, BNetzA, BMWi