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Closing Germany’s Dirty Old Coal Plants Seen Aiding Utilities

Germany must close about 14 gigawatts of old coal plants to reach its climate-protection targets -- and some utilities may benefit from the shift, according to a new report.

Germany would need to shutter 7 gigawatts of hard coal and 6.7 gigawatts of lignite generators starting in 2017 to reach its goal of cutting carbon emissions 40 percent by the end of this decade, Enervis Energy Advisors GmbH said in the report.

That would raise wholesale power prices by about 4 euros ($4.29) a megawatt-hour, said Nicolai Herrmann, an Enervis consultant who presented the research Thursday in Berlin.

“The power plants that remain in the market will profit from these price increases,” Herrmann said. “While it’s not necessarily true for every single plant portfolio, in general, the improved market situation overcompensates companies for the losses incurred from the shutdowns.”

Chancellor Angela Merkel’s government wants the power sector to cut more emissions and is looking for ways to do that. It’s weighing forcing coal-fed plants older than 20 years, which have pushed cleaner natural gas units out of the market, to buy more European Union carbon permits. Analysts say that would force power producer RWE AG to close generators.

Unions representing workers of RWE AG and EON SE plan to protest the proposal on April 25. The Enervis report was commissioned by the Berlin-based research company Agora Energiewende.

source: http://www.bloomberg.com