German energy regulator awards first permits to close coal plants

FRANKFURT (Reuters) - Germany’s energy regulator on Tuesday said some 4,788 megawatts (MW) of hard coal-fired power generation capacity will cease to be marketable from Jan. 1, 2021 as part of a policy to take carbon-polluting capacity out of the market.

FILE PHOTO: A small cargo ship passes the construction site of a controversial coal-fired power plant in the Hamburg suburb of Moorburg early September 8, 2008. REUTERS/Christian Charisius /File Photo

The move reflects Germany’s commitment to ending the fossil fuels age, idling the equivalent of five nuclear plants in one go, while cushioning the impact on utilities, regions and employment.

“The tenders have met with a positive response from the operators. The round was clearly oversubscribed,” said the head of the Bundesnetzagentur regulator, Jochen Homann.

The average payment that operators will receive to shut plants is 66,259 euros ($79,371.66) per MW, incurring total public spending of 317 million euros.

Bids ranged between 6,047 euros/MW and 150,000 euros.

Germany has decided to abandon coal by 2038 and achieve a mostly carbon-free energy system by 2050.

A separate offset scheme for shutdowns in the brown coal-to-power industry is still under review by the European Commission.

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The list of plants affected includes Swedish utility Vattenfall’s Moorburg, RWE’s Westfalen and Ibbenbueren, and Uniper’s Heyden.

Grid operators have until March, 2021 to object and demand that system relevant plants stay open, but by July 2021 are moved to standby operations and support networks during bottlenecks.

Marketing of power output must stop on Jan. 1 at the 11 plants but previously ordered volumes can still be produced.

The regulator said decisions had not been guided by price alone but it had also borne in mind the relationship between the cost and the resulting CO2 reductions.

Uniper said it would swiftly implement the plan for Heyden and RWE spoke similarly of its plans.

The scheme carries on in coming years, with next bids due up to Jan. 4.

After 2027, hard coal plants can be ordered to shut without offsets.

Reporting by Vera Eckert; editing by Edward Taylor, Jane Merriman and Emelia Sithole-Matarise