Gas-fired Power Slump in Germany

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- High gas prices and cheap coal resulted in a major slump in gas-fired electricity generation in Germany during 2012.

Europe's largest economy saw many of its energy providers switch to cheaper coal and rely more on renewables to generate electricity for much of last year. According to the latest figures from Germany's energy regulator, the National Association of Energy and Water (BDEW), the use of natural gas in electricity plants fell by 27%. When looking at natural gas used in power plants, plants with combined heat and power (CHP) and district heating plants it fell by 14%. The BDEW blamed the gas fall-off on the large price difference between coal and gas as well as the growth in renewable energy resources.

"This development in the use of gas-fired power plants illustrates the critical economic situation in which operators of gas-fired power plants find themselves," said Hildegard Müller, Chairman of the BDEW the Executive Board, in Berlin.

Coal-fired plants, both hard coal and lignite-fired plants, accounted for almost 44% of the country's gross electricity demand, up around 1.5% on 2011. Renewable energy continued its growth in importance as an energy source during 2012, with its combined share from wind, solar and biomass rising to 21.9%, compared to 20.3% in 2011. Most notable was the surging growth in solar photovoltaic (PV) sector which increased its overall share in the mix from 3.2% in 2011 to 4.6% for 2012, despite cuts to subsidies.

Nuclear power is on its way out in Germany with the government pledging to shut all 17 nuclear reactors down by 2022. This will remove around 22% of the country's generating capacity overall. In 2012, BDEW said that nuclear's share in the electricity mix decreased to 16%, down from 17.7% in 2011.

Germany's largest energy company, E.ON AG (PINK:EONGY) (Dusseldorf, Germany), has already threatened to close some gas-fired plants due to falling demand and high running costs. In May last year, the company said it was considering closing Irsching 3 in Bavaria and Staudinger 4 in Hesse, which have a combined capacity of 1,037 megawatts (MW), as well as Franken 1 in Nuremberg, which has a capacity of 383 MW. For additional information, see May 22, 2012, article - E.ON Contemplates Closure of Three German Gas-Fired Plants.

In September, the company said it has no plans to build any new coal or gas-fired plants until 2020, similar to move taken by its rival German energy giant, RWE AG (OTC:RWEOY) (Essen, Germany), which said that it has no plans to construct any new plants in Europe for the foreseeable future. For additional information, see September 14, 2012, article - E.ON Postpones New Power Plants Until 2020.

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