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16 Jun 2020, 14:59
Benjamin Wehrmann

Gas price plunge resuscitates hopes for fossil fuel's role in German energy transition

Gas

Clean Energy Wire / Spiegel Online

CORRECTION: In an earlier version of this article, the authors's name was misspelled as "Heckling". The correct name is "Hecking." We apologise for the mistake.

A steep drop in prices for natural gas has sparked hopes among plant operators that the fossil fuel could see its role in the German energy transition strengthened again. According to price comparison website Verivox, wholesale prices for natural gas in Germany have fallen nearly six percent in the first half of 2020, the greatest plunge since the 2009 financial crisis. Power prices in Germany also fell slightly by 0.5 percent over the same six months, as the spread of the coronavirus pandemic has shaken global energy markets. The drop in natural gas prices could partly be outweighed by the planned introduction of carbon pricing in Germany next year, Verivox added.

However, according to an article in Spiegel Online by Claus Hecking, natural gas plant operators see the falling prices as an opportunity to push for using the technology as a bridge between Germany's forthcoming coal exit and an energy system fully based on renewables. Several units of the gas plant Irsching in Bavaria, which has become a symbol for misguided fossil fuel investments in the country and laid idle for the better part of the past five years, could soon re-enter into service as operators suddenly can operate at a profit again, he writes. "Highly efficient and modern gas plants like Irsching are more than suitable for providing a solid base for intermittent wind and solar power production," David Bryson of plant operator Uniper told the magazine. More expensive emissions allowances in the European trading system ETS further add to the current profitability of gas plants, as production has already become cheaper than with coal-fired plants, Hecking writes.

Dwindling gas demand due to the coronavirus crisis has hit German energy companies, because buffer stocks are almost full after a mild winter and prices are at a historic low. However, Germany's pending coal exit and the phase-out of nuclear power by 2022 make it likely that demand for gas will pick up again amid the country's energy transition.

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