Gas-Fired Power Project Abandoned In Germany, As Economics Just Don’t Work

May 10, 2013

Danish company Dong Energy has abandoned plans for an 1,100-megawatt (MW) combined cycle gas turbine (CCGT) plant in Germany, according to a report by Industrial Info Resources.

Danish company Dong Energy has abandoned plans for an 1,100-megawatt (MW) combined cycle gas turbine (CCGT) plant in Germany, according to a report by Industrial Info Resources. Despite having received the green light for the Ludwigsau plant in the German state of Hesse, Dong claimed that it is not possible to operate a gas-fired plant profitably in the current economic climate. It now plans to sell the project.

The company's decision comes just as Germany's government is hoping to reduce subsidies for renewable energy projects and stimulate the construction of more gas-fired plants in order to fill the energy gap left by its decision to ditch nuclear power in 2011. However, running gas-fired plants in many European countries is not profitable at the moment due to high gas prices and the availability of cheap coal imports from the United States. Since last year, Industrial Info reports both Germany and the U.K. have recorded a much higher percentages of electricity coming from coal-fired plants, with a corresponding drop-off in amount of electricity coming from gas-fired plants. For additional information, see Industrial Info's February 1, 2013, article "Gas-fired Power Slump in Germany" (registration required).

According to Industrial Info, the situation is compounded by the very low cost of carbon emissions permits under the European Union's Emissions Trading Scheme (ETS) which makes it cheaper to run coal-fired plants. Closures of less efficient gas-fired plants and a continued decrease in investment in new gas-fired plants are expected to continue until the price of permits is propped up.

Dong is not the only company to recently push away from gas-fired power. In March, Industrial Info says Norway's energy utility, Statkraft AS (Oslo, Norway), announced plans to close its 510 MW Robert Frank gas-fired plant in Lower Saxony. The plant has now been placed in "cold reserve." At the time, Industrial Info says Statkraft said: "In our view, gas-to-power still is the most efficient and environmentally-friendly technology for complementing the production of renewable energy in Germany. However, in the current market situation it is not economically viable to operate older gas-fired power plants, let alone invest in new generation capacities."

For additional information, see Industrial Info's March 21, 2013 report on this story, "Statkraft Shutting German Gas-Fired Plant" (registration required).

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