Germany's biggest power producer RWE to phase out coal by 2030

A Stop sign stands in front of the Neurath lignite power plant of German utility RWE, west of Cologne, Germany, January 16, 2020. REUTERS/Wolfgang Rattay

BERLIN/FRANKFURT, Oct 4 (Reuters) - Germany's largest power producer RWE (RWEG.DE) said on Tuesday it is bringing forward its coal phase-out by eight years and is ready to end lignite-based electricity generation in 2030 as part of a deal reached with the government.

However, faced with a Europe-wide energy crisis after Russia slashed gas deliveries following its invasion of Ukraine, RWE said it would temporarily boost its use of power plants fuelled by heavily polluting lignite, or brown coal.

"In the current crisis, we are contributing to security of supply in Germany by temporarily increasing the use of our lignite-fired power plants, and are thus also helping to displace gas from electricity generation," Chief Executive Markus Krebber said in a statement.

"At the same time, we are investing billions of euros to accelerate the energy transition and are ready to phase out lignite by 2030," he added.

Krebber said the company would not request additional compensation for moving the phase-out date forward beyond the 2.6 billion euros ($2.6 billion) it was promised under the previous plan.

The German government in November agreed to "ideally" bring forward the country's exit from coal-fired power generation to 2030, compared with a previous goal of 2038, but that plan still required negotiations with the individual operators.

As part of the move, the decommissioning of RWE's Neurath D and E power plant units, originally scheduled for the end of this year, will be deferred until March 31, 2024 and remain on the market as previously communicated. read more

Berlin has until 2023 to extend the lifetimes or to transfer the units to a power plant reserve, with both options limited until March 31, 2025.

To safeguard security of supply beyond 2030, the German government can also decide by 2026 to keep RWE's last lignite-fired plants, with a combined capacity of 3.6 gigawatt (GW), on standby until the end of 2033.

These are Niederaussem K and H, and Neurath F and G.

To offset the impact on the region, RWE aims to build 3 GW of gas-fired power plant capacity that is also ready to run on hydrogen, adding it was earmarking coal-fired power plant sites in North Rhine-Westphalia, where RWE is based, for that.

($1 = 1.0132 euros)

Reporting by Christoph Steitz, Paul Carrel and Vera Eckert; Writing by Miranda Murray; Editing by Rachel More and Jan Harvey

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Thomson Reuters

Senior power correspondent for Germany with more than 30 years experience and focused on deregulated energy markets for power and gas, companies, networks, exchanges, renewables, policy, storage, future transport and hydrogen. A German native who has studied and worked in the United States and Britain.