But he says this will occur, which is why the biggest utilities in Germany, E.ON and RWE, have decided to split their assets into new and old companies, jettisoning their old “centralised” generation assets to focus on a new business centred around solar, storage, smart grids and electric vehicles.
“The Energiewende requires a complete strategic reprioritization away from conventional generation and towards renewable energy so that the companies can prepare for the power system of the future,” Lewis says.
He believes that only a handful of coal plants would still be operating by 2030 – the Datteln 4 (1.1GW) and Maasvlakte 3 (1.1GW), and the Westfalen E (765MW) hard coal plants, all of which have very high efficiency rates of 46 per ent.
The only lignite plant still running would be the BoA 2 & 3 units at Neurath (2.1GW), which have a very efficiency rate for lignite plant of 43 per cent. The value of the brown coal generators for both E.ON and RWE would be wiped out completely, and considerably reduced for hard coal. The value of gas-fired generation, though, would increase.
Barclay’s base-case scenario assumes current targets, an average baseload power price over 2020-30 of €28/MWh in real terms (constant 2019 €), and an average EUA price in real terms of only €5/MWh.
Its 2°C scenario would require an average EUA price of at least €45/t in real terms (constant 2019 €) and hence average baseload prices of €55-60/MWh (again in constant 2019 €) over 2021-30.
By 2030, total coal and lignite output in the entire German market is only 50TWh (versus 190TWh in our base case) while total German gas-fired output in 2030 is doubled from the base case to 150TWh.
“The implications of our analysis … of the German power sector – especially when taken together with Germany’s own 2030 targets for energy efficiency and renewable energy – are that very little coal and lignite could run by 2030,” Lewis writes.
Gas displaces coal and lignite over the decade while coal and lignite plants see lower average utilization rates and shorter average operating lives, with what little plant is running by the end of the next decade pushed to the margin.
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