21 Sep 2021, 13:23
Benjamin Wehrmann

Analysis finds eastern German lignite plants will become economically unviable soon

Clean Energy Wire

Eastern German lignite power plants that are scheduled to stay in operation well into the 2030s could soon become economically unviable as renewable power expansion and rising carbon prices let revenues slide, an analysis by Green Planet Energy has found. The cooperative energy provider linked to environmental NGO Greenpeace commissioned analysts at Energy Brainpool to gauge the effects of current energy market developments on coal power. They found that an earlier shutdown of lignite plants would not warrant any compensation payments to operator LEAG. Sönke Tangermann, of Green Planet Energy, said the planned compensation payments of 1.75 billion euros in public money would lack an economic foundation and instead are the product of “political wheeling and dealing”. If the government was serious about its climate ambitions, it would have no choice but to demand an earlier shutdown, he added. “It must end no later than 2030, no exceptions,” Tangermann said. Energy Brainpool assumed that carbon emissions allowances will rise to 105 euros per tonne by 2038, the latest date for completing Germany’s coal phase-out. Based on this trajectory, eastern German lignite plants would be running a loss as early as 2024. “In this case the expected net-worth of the plants will be zero euros by 2030,” analyst Michael Claußner said. Plants like Lippendorf, Boxberg or Schwarze Pumpe could only continue to turn a profit if prices in the European emissions trading system (ETS) stagnate or if renewable power expansion collapses. According to the analysis, the Lippendorf plant alone will consume about three percent of Germany’s remaining carbon budget under the Paris Agreement, roughly 130 million tonnes, if it stays in operation as long as currently planned.

The current coal exit schedule has been formally decided in mid-2020 but is under fire for falling short of delivering the needed emissions reduction to comply with tighter climate targets. Critics also lament that compensation payments guarantee operators profits they would not be able to achieve if market forces were allowed to operate freely, thereby allowing them to keep plants running longer.

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