Keeping Standby German Coal Plants Is Too Costly, Says Operator

(Bloomberg) -- A coal plant operator in Germany has warned that it’s unprofitable to put power stations on standby to help keep the lights on for the next few years, as requested by the nation’s regulator.

Steag GmbH has been asked to keep five coal plants with 2.5 gigawatts of capacity online until end of March 2031 to safeguard the power system in Europe’s biggest economy. The company lodged a complaint against the order, it said Thursday, citing the significant costs associated with such a move at a time when energy companies are supposed to be investing in cleaner fuel sources.

While Germany hopes to phase out coal entirely by 2030 — eight years before a legal deadline — many companies have warned it might not have enough alternative power sources by then to do so. This Sunday, it’s set to shut off seven plants and put several others back into reserve as a temporary permit to burn more of the dirty fossil fuel this winter expires.

At the peak of Europe’s energy crisis, Steag was asked to bring five of its coal plants back online amid fears that curbed gas flows from Russia could lead to blackouts. While they were supposed to cease operations at the end of this month, Germany’s Federal Network Agency recently classified the plants as “systemically relevant”, meaning that Steag can’t fully shut them down and must keep them operational. 

While the decision is good for Germany’s energy security, “this model is not economically viable under the current rules,” Steag’s Chairman Andreas Reichel said.

The Federal Network Agency declined to comment on the company’s complaint.

In December, BNetzA also ordered Uniper SE and EnBW Energie Baden-Württemberg AG to keep plants in reserve that the companies had wanted to retire.

While the operator of a reserve plant can claim reimbursements from the grid operator, it is not allowed to participate in the regular energy markets. Germany also does not have a capacity market.

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