UPDATE 1-German utilities should pool ailing hard coal plants, union says

Sun Feb 23, 2014 10:55am EST

Related Topics

* Power plants suffer in German energy sector crisis

* Pooling plants would save 10 pct of costs-union head

* Entity could be set up within a year -union head

* E.ON says pooling idea is interesting (Adds E.ON comments on bullet and on text)

By Matthias Inverardi

HALTERN AM SEE, Germany, Feb 23 (Reuters) - Germany's utilities should pool their struggling hard coal plants into a joint entity, the head of a labour union said, in a bid to save jobs and reduce costs as a rise in renewables has driven many conventional power plants into loss.

Europe's biggest economy has embarked on an ambitious transformation of its energy sector or Energiewende, shifting away from nuclear and towards renewable sources, hurting coal and gas plants that are forced to limit their operation in favour of solar and wind.

This, along with tepid demand for power in Europe, has led Germany's big four utilities - E.ON, RWE, EnBW and Sweden's Vattenfall - to mothball or close thousands of megawatts (MW) worth of plant capacity.

One way for utilities to share the burden and save costs would be to bundle their hard coal plants into a jointly owned group, said Michael Vassiliadis, head of IG BCE, Germany's third-largest union after IG Metall and Verdi, which represents workers in the mining, chemicals and energy sectors.

"The mandate of such an entity would be to support the Energiewende in an efficient and cost-effective way and to secure the supply of electricity," Vassiliadis said, adding the initiative could be formed within a year if backed by all parties.

A spokesman for E.ON told Rheinischen Post newspaper on Sunday that the pooling idea was "interesting" but what was needed would be first to launch a so-called capacity market for conventional power plants.

"Only by doing that can one secure a stable supply of electricity," the spokesman said.

Vassiliadis said he had discussed the idea with companies and politicians and the political response had been interested, though utilities had not been overly keen.

German regulations give solar and wind power preferred access to the power grid, though conventional plants are still needed because of the intermittent nature of renewables.

Last year, hard coal plants accounted for 19.7 percent of power generation in Germany, ranking third after lignite plants, with a share of 25.8 percent and renewable sources in second at 23.4 percent, according to industry association BDEW.

Vassiliadis said his plan referred to hard coal plants with total capacity of between 28 and 30 gigawatts (GW), most of which are owned by E.ON, RWE, EnBW, Vattenfall and STEAG, which is 49 percent owned by chemicals maker Evonik.

If they were bundled, the companies could save about 10 percent, or 100 million euros ($137 million), of operating and maintenance costs per year, he said. ($1 = 0.7275 euros) (Additional reporting by Christoph Steitz. Daniela Pegna and Marilyn Gerlach in Frankfurt; Editing by David Holmes)

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