Greenpeace Energy launches complaint against hard coal tenders
Clean Energy Wire / Tagesspiegel Background
Power supplier Greenpeace Energy has launched a complaint with the European Commission to stop the new hard coal phase-out tenders. The tenders are part of Germany’s coal exit strategy, and encourage coal plant operators to quote a bid value at which they are willing to refrain from burning coal and, if successful, are compensated by that amount. Previous run-times and expected CO2 emissions are taken into account when judging the bids. The maximum price set in the first round of tenders for a capacity of 4 gigawatt, which ended on 1 September, was 165,000 euros per megawatt net nominal capacity. Greenpeace Energy claims this procedure harms competition in the power sector and is bad for the climate. Because coal power operators could bid to receive the shut-down premium immediately but then let their plants run until the winners were announced, the hope of being awarded millions in shut-down payments could lead even loss-making plants to continue operating, the power supplier argued. More coal power in the system will reduce the wholesale power price and therefore reduce the income of new, renewable power generators. "If the German government is compensating the operators of coal-fired power plants with large sums of taxpayers' money, then in our view this is illegal state aid," said Sönke Tangermann, CEO of Greenpeace Energy, in a press release.
Results from the first round of tenders will be announced after 1 December 2020. According to an article in Tagesspiegel Background, it is not yet clear how big the interest from power plant operators will actually be. When calculating how much money they could earn in the coming years, plant operators had to include many unknowns such as market and CO2 price developments, Nora Zaremba writes. And because many of the 20 GW of hard coal plants are exempt from participating in the tenders, such as those that are already lined up for retirement and those that are contributing to grid security in the south of Germany, or have chosen to switch to natural gas, it is also possible that not many will have participated in the auction at all.
The tenders will be carried out between 2020 and 2027, as stipulated by the law. Hard coal plants that are still in operation and small brown coal plants of up to 150 megawatts are eligible to participate in the tenders.