Dong Energy Drops German Gas-Fired Project

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Danish company Dong Energy (Fredericia, Denmark) has abandoned plans for an 1,100-megawatt (MW) combined cycle gas turbine (CCGT) plant in Germany.

Despite having received the green light for the Ludwigsau plant in the German state of Hesse, Dong claimed that it is not possible to operate a gas-fired plant profitably in the current economic climate. It now plans to sell the project.

The company's decision comes just as Germany's government is hoping to reduce subsidies for renewable energy projects and stimulate the construction of more gas-fired plants in order to fill the energy gap left by its decision to ditch nuclear power in 2011. However, running gas-fired plants in many European countries is not profitable at the moment due to high gas prices and the availability of cheap coal imports from the United States. Since last year, both Germany and the U.K. have recorded a much higher percentages of electricity coming from coal-fired plants, with a corresponding drop-off in amount of electricity coming from gas-fired plants. For additional information, see February 1, 2013, article - Gas-fired Power Slump in Germany.

The situation is compounded by the very low cost of carbon emissions permits under the European Union's Emissions Trading Scheme (ETS) which makes it cheaper to run coal-fired plants. Closures of less efficient gas-fired plants and a continued decrease in investment in new gas-fired plants are expected to continue until the price of permits is propped up.

Speaking to the media, a Dong spokesperson said: "It is not possible to operate a gas-fired power plant in Germany in a profitable way under current market conditions, and the outlook is unlikely to change".

In March, Norway's energy utility, Statkraft AS (Oslo, Norway), announced plans to close its 510 MW Robert Frank gas-fired plant in Lower Saxony. The plant has now been placed in 'cold reserve'. At the time, Statkraft said: "In our view, gas-to-power still is the most efficient and environmentally-friendly technology for complementing the production of renewable energy in Germany. However, in the current market situation it is not economically viable to operate older gas-fired power plants, let alone invest in new generation capacities." For additional information, see March 21, 2013, article - Statkraft Shutting German Gas-Fired Plant.

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