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Germany will not force hard coal plant closures before 2026 - draft law

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By Reuters
Germany will not force hard coal plant closures before 2026 - draft law
FILE PHOTO: The coal power plant "Staudinger" by energy company Uniper is photographed during sunrise in Grosskrotzenburg, 30km outside Frankfurt, Germany, February 13, 2019. REUTERS/Kai Pfaffenbach   -   Copyright  KAI PFAFFENBACH(Reuters)

By Markus Wacket

BERLIN (Reuters) – The German government will not force hard coal power plants to close over the next seven years, a draft law expected to be approved by the cabinet next week showed on Tuesday.

A previous blueprint seen by Reuters stipulated that utilities would be forced to deactivate hard coal power plants by 2026 if not enough closures happen voluntarily.

The government plans to use a mixture of subsidies and tenders to encourage operators to close coal plants beginning next year.

The draft law could make the process more expensive if it requires the government to spend more on such incentives.

It calls for incentives to fall each year, a strategy designed to entice operators to close down coal plants early.

It is part of German plans to phase out coal by 2038 and will be put to a vote in the Bundestag lower house should the cabinet approve it next Monday.

It envisages that by 2022 an estimated 12 hard coal plants would be shut down, leaving about 30 feeding some 15 gigawatts (GW) into the grid.

Germany has more than 40 plants running either fully or partially on hard coal, according to the Federal Environment Agency.

The decision against forced closures looks set to allow utility Uniper <UN01.DE> to start commercial operations at its 1.5 billion euro Datteln 4 coal-fired power plant.

It had originally been recommended that the 1.1 gigawatt plant, which would add 100 million euros to Uniper’s operating profit per year, never enter service.

Sascha Bibert, Uniper’s finance chief, declined to comment on the draft law, saying he would wait for the official version.

The government has estimated the cost of shutting down hard coal plants at less than 1 billion euros.

Last month, measures it approved to drastically cut greenhouse gas emissions were criticised by activists and industry groups as too weak to achieve Germany’s goal of becoming emissions-neutral by 2050.

The government also wants to reach a deal with utilities on a timetable to shut down brown coal plants and agree a framework for compensation.

Starting in 2020, the government each year will decide how many gigawatts of brown coal-produced energy should be removed from the grid and ask utilities to submit compensation estimates.

The cost of shutting brown coal plants is estimated at more than 2 billion euros.

(Additional reporting by Christoph Steitz in Frankfurt; Writing by Joseph Nasr)