Over for Moorburg – this is where the coal phase-out reveals its greatest weakness

For the first time, the federal government auctioned decommissioning premiums for coal-fired power plants. Vattenfalls Moorburg is one of the “winners”. After high construction costs, it was only on the grid for six years. Now there is a risk of a loss of billions. Another coal giant is better off.

The German citizens are paying 317 million euros for the first round of Germany’s coal phase-out. That is the result of the first auction of decommissioning premiums by the Federal Network Agency.

The energy authority had tendered state aid for the decommissioning of four gigawatts of coal power. Operators who demanded the lowest compensation payment from the federal government were awarded the contract.

The auction was significantly oversubscribed: in the end, there were eleven power plants with a total output of even 4.8 gigawatts that successfully competed for compensation payments. They are now no longer allowed to market their electricity from January 1, 2021 and no longer burn coal from July 8, 2021.

With this procedure, the Federal Network Agency is implementing the federal government’s decision to phase out coal. 12.5 gigawatts of hard coal and lignite power plants are to be shut down by the end of 2022. With the auction, a procedure was chosen that was supposed to protect the state treasury when the coal phase out.

Apparently with success: On average, the operators agreed to give up one megawatt of power plant capacity for around 66,000 euros. The taxpayer will have to pay for the premature shutdown of a medium-sized hard coal power plant with 300 megawatts in arithmetic terms of just under 20 million euros.

The amount of compensation for hard coal-fired power plants appears small compared to the compensation that the state pays for lignite plants. Here, without a tendering process, there are compensation payments from the federal government for the operators Leag and RWE in the amount of 4.45 billion euros for 18 gigawatts of capacity.

It is true that electricity generation in lignite and hard coal power plants can hardly be compared in terms of cost structures. But if the taxpayers get out of lignite per megawatt almost four times more expensive than out of hard coal , this could raise competition law demands.

In fact, the EU Commission had only announced last week that it wanted to examine the German lignite compensation even further.

RWE is saying goodbye to hard coal entirely

With the end of the first round of auctions, some of the most modern German coal-fired power plants will go offline in the coming year. The RWE is an only seven year old power plant with the plant Westphalia Block E.

Together with the Ibbenbühren power plant, RWE has now completely bid farewell to German hard coal with this auction. Because the group no longer has to participate in any further auction, it can also handle data freely.

As the only participant in the auction, the group reveals the amount of its bid: RWE will receive 216 million euros for the closure of its last two hard coal-fired power plants in Germany.

By Olaf Preuss & Daniel Wetzel | December 01 2020

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