E.ON Contemplates Closure of Three German Gas-Fired Plants

Researched by Industrial Info Resources Europe (Galway, Ireland)--E.ON AG (PINK:EONGY) (Dusseldorf, Germany), Germany's largest utility, has approached network regulator Bundesnetzagentur (Bonn, Germany) about plans to shut down gas-fired power plants. The plants in question are Irsching 3 in Bavaria and Staudinger 4 in Hesse, which have a combined capacity of 1,037 megawatts (MW) and are both rumoured to be closing next year, and Franken 1 in Nurembergm, which has a capacity of 383 MW and is rumoured to be closing in 2014.

E.ON has not decided about whether to close the three gas-fired power plants. "We have not taken a formal decision on whether to close these or other gas-fired plants. but we are in the process of evaluating the profitability of each plant," E.ON spokesman George Oppperman said, dismissing contrary news reports.

E.ON and other German power plants operators are losing out as run-time hours of gas-fired plants are reduced because of the preferential feed-in of electricity from renewable sources in the grid. Utilities say high natural gas costs, mostly tied to oil with its inbuilt geopolitical price premiums, and low power prices make gas plants an unprofitable business. In addition, renewables are the preferred form of energy to be fed into the power network, forcing utilities to cut output from conventional plants in times of abundant wind or sunshine.

In a report on the supply shortage that Germany faced during the winter of 2011-12, Bundesnetzagentur said that it expects that the situation in the electricity supply grid in the winter of 2012-13 will be similar to that of the past winter. According to Bundesnetzagentur, "A decline in the generating capacities in southern Germany cannot be accepted. A possible shutdown of power plants in southern Germany must be compensated by the availability of backup power plants, as the existing transmission network cannot handle the required power transport."

If E.ON does decide to shut down the three gas-fired plants, they could be put in a 'cold reserve' status to provide back-up capacity in the event of an unforeseen shortage of power supply.

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