Germany needs coal to balance dependency on Russian gas -watchdog
* Says coal needed to replace nuclear power
* Rising gas exposure carries risks in Ukraine crisis
* Says grid expansion must succeed for energy shift to work
BERLIN, Aug 27 (Reuters) - Germany will continue to need coal-fired power plants, its energy regulator said, warning that Europe's biggest economy should not rely solely on renewables or risk increasing exposure to Russian gas as it shuts down nuclear plants.
"Those who call for an end of coal power generation don't have much interest in a reliable energy policy," Jochen Homann, president of the Federal Network Agency (BnetzA), told an energy industry conference on Wednesday.
"We will close further nuclear plants; these capacities need to be replaced," he said, adding that coal power was vital to achieve this.
Germany's Energiewende, the country's ambitious plan to reform its energy supply, calls for the closure of all nuclear plants by 2022. A surge in solar and wind power is expected to plug some of the gap, while the use of coal is opposed by campaigners who oppose climate-harming carbon emissions.
The BnetzA oversees power transmission firms (TSOs) that must guarantee a steady supply of electricity, a task that has become more difficult since Germany shut 40 percent of its nuclear plants in 2011 following the disaster at Japan's Fukushima nuclear plant.
Homann said that intermittent renewables alone would not be able to replace nuclear power and provide round-the-clock supply and warned that increased exposure to gas could also carry risks due to the current crisis in Ukraine, which is a transit route to Europe for Russian gas.
Russia's involvement in the conflict has led to renewed calls for Europe to shift its reliance away from the country, which meets demand for about a third of the continent's natural gas, oil and coal.
"Whoever eyes a quick switch to gas has to face the question whether this can be an option in light of current events in Ukraine," Homann said.
ENERGY SHIFT COULD FAIL
Homann also said that Germany needed to speed up the expansion of power networks, which are badly needed to integrate the input of thousands of megawatts of solar and wind capacity installed in recent years.
Less than 300 km has been completed of 1,900 km of additional lines planned in 2009 under the authority of German states, a process hampered by red tape and public resistance against their construction. The implementation of a 2012 plan to add a further 2,800 km has not yet begun.
"The power sector's energy shift will fail if we cannot make progress with network expansion," Homann said.
As a result of surplus renewable output, many of Germany's gas-fired power plants have been pushed out of the market and can no longer cover their costs.
This has prompted German utilities, most notably E.ON , RWE and EnBW, to shut down some gas plants and call for payment schemes to reimburse them for keeping other plants on standby to ensure secure supply.
Similar schemes are being introduced in France and Britain, and Homann said that it would make sense to consider such a capacity mechanism.
"But it should not serve as a carte blanche for subsidy payments," Homann said. (editing by Jane Baird)