Gas price hike revives debate over Germany’s coal phase-out schedule
Handelsblatt
The spike in energy prices as a result of the US- and Israeli-led war on Iran is reviving a debate around Germany’s coal phase out plans, as industry representatives call for activating backup plants and delaying planned closures, business daily Handelsblatt reported. “We have to make better use of our domestic production capacities,” Andreas Reichel, head of energy company Steag Iqony, told the newspaper.
Reichel, whose company operates reserve plants, said coal plants that are currently kept only in reserve mode should be allowed to return to the regular market. “Reserve plants should be used for cushioning price increases, at least temporarily,” the energy manager said, pointing to a clause in the government’s coalition treaty that promises to introduce such a mechanism. This would ease overall electricity prices, which are primarily driven upwards by gas shortages, Reichel argued.
Christian Seyfert, head of energy-intensive industry association VIK, told Handelsblatt that reactivating coal plants could help to prevent or at least curb price spikes. With a view to high gas prices as a result of the escalating conflict in the Persian Gulf region and low gas storage levels, “it is increasingly questionable to burn gas for electricity production if there are alternatives,” Seyfert said.
However, not all plant operators agree that a return of reserve coal plants would help to stabilise the energy market in a meaningful way. Michael Lewis, head of energy company Uniper, said such a step would “weaken market signals and undermine urgently needed investment security”.
Germany has put about 10 gigawatts (GW) of coal-fired power plants into its backup reserve, a mechanism to ensure grid stability and security of electricity supply. The country plans to install 12 GW of new gas plants to take on this role, but delays to the required auctions mean that these are unlikely to be ready before the early 2030s.
Germany’s coal exit law, agreed in 2020, introduced legislation to guarantee the step-by-step decommissioning of power plants, and stipulates that coal-fired power production must cease by 2038 at the very latest. Germany's western coal region planned for a 2030 phase-out. However, a likely lack of adequate backup capacities make this earlier deadline increasingly unlikely.
The economy ministry has so far not decided whether the return of coal plants should be implemented, Handelsblatt added, noting that this would involve several economic and legal considerations that still need to be assessed, including compliance with EU rules. The ministry noted that most of the reserve plants are “relatively old and inefficient.”
Germany previously made exceptions to its coal exit schedule in the 2022 energy crisis, by allowing some plants to return to the market, but reverted to its original plans in 2024. The economy ministry is expected to release a monitoring report on the coal exit’s progress by 15 August 2026, in which it will assess the current phase-out schedule’s effects on supply security and price stability.