* Trianel expects losses at new power station for years
* Utility network partly blames green power for price slump
* Wants market to be changed or plants to close
By Vera Eckert
ESSEN, Germany, Feb 5 German utility group
Trianel said its new coal-fired power station at Luenen will be
loss-making for years and urged policymakers to come up with
remedies for a skewed energy market.
Luenen, planned around five years ago by the 29 local
utilities and regional energy firms who together form Trianel,
is a victim of German policy to favour low-carbon generation
with subsidies which have driven down the price of electricity
from other sources.
"The erosion of power prices through the unhindered
expansion of renewable energy makes any investment in the energy
shift an economic shot in the dark," said Seven Becker,
spokesman for the Trianel management board.
"We need a stable market model which offers investors ...
the chance to finance the capital costs of new power plants," he
told reporters at the E-World of Energy trade fair in Essen.
Discussions at the annual event focused on demands that
Germany should make adjustments to its blueprint for quickly
turning into a low-carbon economy.
While renewable energy is subsidised regardless of supply
and demand fundamentals, its intermittent nature means other
sources still have to be available on the grid, even though they
are increasingly uneconomic.
Becker said Trianel's experience illustrated the dilemma,
since its losses on Luenen would run into millions of euros
annually for several years or more.
"We're not alone with these problems, they affect the entire
market," he said, adding companies such as RWE, E.ON
, Steag and GDF Suez faced the same scenario.
The 750 megawatts (MW) Luenen plant has been in test mode
since late last year and is expected to run at full capacity
from the third quarter.
The 1.4 billion euros ($1.9 billion) plant was planned when
operators stood to achieve some 60 to 80 euros from selling a
megawatt hour of round-the-clock baseload electricity in the
This price has dropped to 41 euros/MWh. Some 20 percent of
the decline has come in the last 12 months, partly due to the
weight of new solar power supply.
In a rush to lock in generous green energy subsidies for 20
years before reductions take hold, solar operators last year
added a fifth of new capacity and now deliver 32,000 MW, as much
as all of Germany's hard-coal fired plants.
Becker said prices needed to be around 55 to 60 euros/MWh
for coal-burning to make economic sense. And he said the market
might need a further wave of closures to allow a return to
Germany early in the last decade cut 4,000 MW in one go,
pushing prices up 20 percent.
Other options are also being discussed - for example
redrawing the market to reward providers of round-the-clock
power and forcing green producers into some form of operational
or financial responsibility for supply security.
There is also a political debate about a plan by German
environment minister Peter Altmaier to cap renewable subsidies
as early as this year.
Becker stressed that Trianel, despite its problems, was
committed to be a player in the evolving energy market - it will
take online this year a 27 MW onshore wind power plant in
Eisleben and a 200 MW offshore wind park in the North Sea.
($1 = 0.7376 euros)
(Editing by David Holmes)