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German coal drops to 37% in 2017 power mix as phase-out starts: BDEW

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German coal drops to 37% in 2017 power mix as phase-out starts: BDEW

Highlights


Combined coal/lignite share down from 40.3% in 2016

Hard-coal output hit hardest by closures, rising prices

Gas-plant output inches higher to 13.1% from 12.5%

London — The share of coal in Germany's power mix has dropped sharply in 2017 with the combined lignite/hard-coal-fired power plant output accounting for 37% down from 40.3% in 2016, energy lobby group BDEW said Wednesday.

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According to the lobby group, the market-driven phase-out of coal has already started.

"The data shows impressively that an accelerated move from carbon-intensive to low-carbon forms of power generation is already happening," BDEW chief Stefan Kapferer said.

The BDEW, whose data includes most gas-fired power plants, estimated that the share of gas in the power mix increased to 13.1% this year from 12.5% in 2016.



Nuclear fell to 11.6% from 13% in 2016, it said.

Renewables output registered the biggest annual gain -- mainly driven by rising wind output -- to account for 33% of the 2017 power mix, up from 29.1% in 2016, it said.


COAL CLOSURES


Kapferer said the gradual phase-out of lignite and hard-coal has already started with six hard-coal plants taken offline this year in addition to the two lignite units that were moved into a reserve mechanism no longer participating in the wholesale market.

Based on the grid regulator's closure list, a further 14 hard-coal plants have applied for closure, with the BDEW pointing at changed market fundamentals with rising coal and carbon pricing making older coal-fired power plants no longer economically viable, it said.

According to the BDEW, the German power sector was on track to meet its 2020 carbon-cutting target with the BDEW having presented a proposal to remove an additional 5 GW of coal capacity from the market by 2020 through an auction-based system with compensation for the operators.

However, due to the accelerated nuclear exit in 2021 and 2022, the current oversupply of power will turn into a structural undersupply by 2023 with any further closures only possible if politicians improved the framework conditions for new gas-fired power plants beyond 2023, the BDEW said.

Following the inconclusive election in September, Germany has been without a proper government for a record 12 weeks after initial talks between Chancellor Angela Merkel's CDU/CSU, the Greens and the FDP collapsed in November amid questions over how many coal plants to close. A renewed attempt to form a coalition between CDU/CSU and the SPD was set to start in January.

--Andreas Franke, andreas.franke@spglobal.com
--Edited by Dan Lalor, daniel.lalor@spglobal.com