Germany shifts to coal to tackle its installed capacity shortfall

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26 October 2012, Gas

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In October Germany added coal-fired capacity to its generation mix, with Vattenfall increasing coal-fired capacity at the Boxberg R Plant in the state of Saxony by 675MW. However, this is tiny compared with the 12,696MW of nuclear capacity that is required to shut down by 2022.

Germany's Energiewende "energy switch" calls for a phase out of nuclear by 2022, using renewables to replace the lost capacity. New coal capacity in Germany is therefore surprising given the government's enthusiasm for pursuing low-carbon generation. However, this change raises massive challenges with consequences for the country's energy security and the profits of its utility companies.

Essentially, Germany is faced with the challenge of connecting the dots between the source of generation power - in particular from renewable offshore wind farms in the north of the country - to where electricity is demanded, such as to factories and businesses in the south and east.

The lines to join the dots - high voltage transmission lines, to be precise - are running behind schedule. Germany has 72 projects that have already started or should have started, representing some 5,400km of lines. A portion of these lines has been delayed due to public objections as well as bureaucratic delays, and a further 600km of lines that the four network companies (TenneT, Ampiron, 50Hertz, and TransnetBW) have agreed is necessary faces potential delay due to public consultation.

Clearly, more gas and coal plants will need to be added to meet demand. Germany's network development plan forecasts almost the same amount of hard coal in 2023 as now, and only about 2% less brown coal compared with 2012. The main replacement of the lost nuclear capacity will be from solar and wind - but even if these are built, the lines still need to be there.

Coal's low cost is driving other countries to pursue this generation. The UK looks set to burn up its quota of coal-fired generation capacity before 2015; meanwhile, Datamonitor notes that countries on Europe's periphery that are exempt from European Union low carbon regulations are also pragmatic about adding coal to their mix. For example, Turkey is adding new coal-fired generation capacity. In August 2012 the state coal authority TKI opened a tender for the construction and operation of two coal fields, which is just the second of a line of tenders that will contribute to the new 17-18GW of coal capacity desired by the government for 2023.

Source: MarketLine

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