RWE cancels plans for new coal plants, including Niederaussem

FRANKFURT, April 26 (Reuters) - German utility RWE is to cancel future investment in coal-fired power plants, including a large brown coal power plant at Niederaussem near Cologne, to focus on renewables.

The company is planning a major reorganisation later this year under which RWE will take over 10,000 MW of renewable power assets from subsidiary Innogy and rival E.ON , making it the world’s number five renewables company.

“In the future, RWE will focus on electricity generation from renewable energy sources. Consequently, the company will no longer invest in new coal-fired power stations,” it said in a statement on Friday.

RWE had originally started planning for the for the 1,200 megawatts (MW) BoAplus lignite-fired power station at Niederaussem in 2012 to replace older generation units at the site that uses locally mined brown coal with latest coal-burning technology at that time.

But the project was languishing when the wholesale power market slumped between 2012 and 2016 in the wake of the financial crisis and because of overcapacity, which led to major reorganisation in the industry.

Analysts say that global climate goals and the environmental case against carbon emissions from coal burning now make projects such as Niederaussem unrealistic.

RWE’s chief financial officer Markus Krebber last week told Reuters the company would spend billions of euros in coming years on green power, alongside storage technologies and gas-fired power.

But RWE also said coal would still remain part of its power systems during a transition period. The company still operates 10,300 MW of brown coal and 6,500 MW of hard coal fired capacity in its core European market.

Currently some 40 percent of Germany’s power comes from green sources. RWE said as a result coal plants were needed to provide stable backup capacity, although their share in the electricity mix would decline gradually.

The heavy contribution from volatile renewables puts major stress on power grids and can threaten supply security for consumers. Round-the-clock supply from coal-burning plants can help to keep grids stable.

RWE is holding out for compensation under a German plan to abandon coal burning by 2038 at the latest. (Reporting by Vera Eckert, editing by Jane Merriman)