Natural gas-fired power plants in Germany on the brink of extinction?

Author: Dr. Klaus Hassmann, Cluster Energietechnik (As of: April 2018)

In Germany, before the energy transition, a mix of coal-fired, natural gas-fired and nuclear power plants provided a safe, reliable and economical electricity supply in the country. Market-dependent, that is cost-, price- and not so much environment-driven, electricity from gas-fired power plants was used in peak as well as lower mid-load (annually around 3000 to 4000 full-load hours), hard coal in mid-load (around 5000 hours) and lignite as well as nuclear energy in base load.    

What one might have expected before March 2015 (initial writing of this article) due to the framework of the Energiewende heard and read in Germany suggested that operators of natural gas-fired power plants no longer saw any prospects for feeding electricity into the public grid; this is still true today. Here's an example: an application for decommissioning was submitted for the modern and environmentally friendly power plants Irsching 4 (550 MW) and Irsching 5 (846 MW), which went into operation near Ingolstadt in 2010/11; this application was rejected by the grid operator for reasons of system security. As financial compensation, compensation is paid which - according to the operators - does not cover costs. The operators continue to try to enforce the decommissioning. 

Natural gas power plants - quo vadis?

Generally, the situation around natural gas-fired power plants has changed from "hopeless" to "maybe something will work out after all." This is due, among other things, to the significant delay in the expansion of the transport pipelines from north to south beyond 2022. Until the lines are completed (and perhaps beyond), security of supply requires new distributed generation facilities at certain grid nodes. These power plants will be put out to tender; natural gas-fired plants, whether gas engines or gas turbines, have the best chance of winning in this process compared to other fossil fuels; the "old" plants will only benefit if they are located close to the  endangered grid nodes. 

However, the fact remains that on the German market, electricity generated by the natural gas-fired power plants in operation will no longer cover even the operating costs. From an "earning" of the investment costs (depreciation) together with interest and profit can be already not at all the speech. Plain and simple: the operators lose money for lack of utilization; in the present article some points of view are derived and described.

Sources

Fachliche basis are the power plant lists published by the Federal Network Agency of 31. 3. 2017  and selected previous years as well as the results of the AG Energiebilanzen of 7. 2. 2017; from the Internet some additional supplementary information was also drawn. 

Development of gas-fired power plants from 2013  

Table 1: Evaluation of the above literature sources.

Gross electricity generation from AG Energiebilanzen                                  

The figures listed in Tab 1 for the years 2014 to 2017 show a slight increase of 1700 MW in the power plant capacity in operation. In the sum of 2013, 2015 and 2016, about 2600 MW (17 power plants) of new capacity has been commissioned. The larger units are generally plants whose planning and construction had already begun in the years before the energy transition. This trend is expected to weaken significantly in the next few years. In comparison, 10 plants with a total of around 500 MW of power plant capacity were decommissioned in these 3 years, i.e. significantly fewer than new ones were commissioned. Also interesting: slightly more than 10% of the power plant capacity is accounted for by plants <10 MW. 

According to data from AG Energiebilanzen, gross electricity generation in Germany amounted to 638 TWh in 2013 and 647 TWh in 2015; it therefore increased slightly. From gas-fired power plants, it was 68 TWh in 2013 and 62 TWh in 2015. From this, a full-load operating hour figure of approx. 3000 hours for 2013 and 2700 hours for 2015 can be estimated; these are values that definitely fit into the peak or lower middle load mentioned at the beginning. For 2016, no final figures are given in the above literature source, but an estimated value for gas-fired power plants, which shows a clear upward trend compared to 2015. 

Natural Gas Power Plants - An Outlook

A clear decline in electricity production from gas-fired power plants as predicted by operators has not yet occurred in the 3-year period under consideration. Presumably, this is because numerous power plants generate not only electricity but also heating and process heat; the associated revenue should make the low electricity prices on the stock exchange "bearable". Industrially operated power plants will also have made a certain contribution to this. The question of whether this trend will continue will be exciting - the next rounds of updates to this article will shed light on this.

Some measures,

• the already mentioned tendering of power plant output at "critical" grid nodes, made necessary by delays in the expansion of transmission grids
• the intention of the EU to reduce the CO₂ price from today's few €/t CO₂  by significantly reducing CO₂ allowances towards 30 €/t CO₂, i.e. to increase it noticeably
• an increase in the exchange electricity price as a result of the expected early decommissioning of the "very aged" coal-fired power plants if the Jamaica coalition government comes to power (the shutdown of the last nuclear power plant in 2022 is likely to reinforce this trend)
• the fact, that at the beginning of the next decade the promotion of the first renewables will expire and must be decided whether these plants will remain on the grid or not will additionally contribute to the fact that electricity from gas-fired power plants will remain a building block for security of supply.

Also the climate would benefit from the use of new gas-fired power plants with around 60% electrical efficiency. Of course, this is only true as long as there is not enough excess electricity stored, especially from photovoltaics and wind, and fed into the grid during windless and sunless periods; this is unlikely to happen in the next 1 to 2 decades. The transport networks will also probably take longer to develop than estimated by the network operators and the Federal Network Agency. Result, as in this article at the beginning mentioned: Perhaps nevertheless still something goes.