Coal phase-out requires new gas-fired power plants

01/12/2024

Source: Energy & Management Powernews

The German Association of Energy and Water Industries took stock of the past year in Berlin. It is calling for urgently needed decisions in the energy sector for 2024.

The German government must present the power plant strategy quickly this year and link it to a capacity market. This was demanded by Kerstin Andreae, Managing Director of BDEW, on January 11. "There can be no coal phase-out without new hydrogen-capable gas-fired power plants to secure the electricity supply in times of low wind and sunshine," warned the representative of the German Association of Energy and Water Industries (BDEW).

The German government must overcome the budget crisis quickly in order to ensure orderly planning security in the future. "We need a power plant strategy with clear framework conditions to incentivize the construction of hydrogen-capable gas-fired power plants and create investment security," demanded Andreae. At least 15,000 MW of new secured generation capacity would be needed in Germany by 2030. However, the planning, approval and construction of a new gas-fired power plant takes an average of six years, which is why it needs to start now, Andreae reminded the audience.

At the same time, she criticized the excessively high cost of electricity in Germany, which is slowing down the switch to electromobility and heat pumps. The German government should therefore reduce the electricity tax for all consumers to the minimum possible under European law, she told journalists. 27 percent of the electricity price in Germany is currently made up of state levies. She reminded the industry that the extremely high security of supply in Germany is also valuable, which is why the electricity price should not be the only factor in location decisions.

Further accelerate the expansion of renewable plants

In addition, the second part of the solar package must be adopted as quickly as possible and the expansion of renewables must be further facilitated. "More than 50 percent green electricity in 2023 is a success," said Andreae. Much more can be achieved by 2030 if bureaucracy is further reduced and more land is made available for installations. The solar package contains many sensible regulations to further accelerate the expansion of photovoltaics and onshore wind.

With regard to the expansion of renewable energies, the issue of storage is also of crucial importance. It is therefore good that the Federal Ministry of Economics has announced a holistic storage strategy for the first quarter of 2024. In addition, consumers must be relieved of grid charges. "It must be clarified whether the transformation costs for the energy transition should be financed exclusively by grid customers or whether this should be financed from the federal budget," demanded Andreae.

Connecting the hydrogen and natural gas grids

The German government's initiatives for a hydrogen ramp-up are positive. Andreae rejected opinions that the planned hydrogen core network was oversized. After all, 60 percent of existing natural gas pipelines would be converted for this purpose. The conversion of natural gas storage facilities for hydrogen is also necessary and must be supported. "We need both," she said. The network planning for the existing gas network prepared by the Federal Network Agency is also eagerly awaited.

The Building Energy Act and the Heat Planning Act from the previous year are the foundation for the heating transition. "The infrastructures are the basis for the heating transition," said Andreae. It is therefore crucial that the expansion and conversion of the various necessary network infrastructures is planned and implemented efficiently and in a coordinated manner. The creation of municipal heating plans is a necessary first step here. The BDEW boss appealed for planning certainty and financial security from the federal government for the enormous investments required for the heating transition.

Enabling investment

600 billion euros of investment will be required from energy suppliers by 2030 for the transition to renewable energies. "This is only possible if private capital can be raised," said Andreae. This would require simplifications on the regulatory side and coordination between investors and companies. The energy transition offers the opportunity to ensure the resilience of supply and to keep value creation in the regions, she promised.

On the new electricity market design, she praised the consultation process on Section 14a of the Energy Industry Act (EnWG) for the early and broad-based participation of all stakeholders. This had led to a consensus and could serve as a blueprint for future problems. For the electricity market design, Andreae is hoping for a final report in February once the consultation has been completed, from which the Federal Ministry of Economics will then have to present and consult on a draft.

Author: Susanne Harmsen