€1.5bn boost for Germany’s CHP sector

Germany’s combined heat and power sector is set to benefit from a €1.5bn injection in investment after the government decided to water down its levy on coal-fired power plants.

A document forwarded to COSPP on Thursday morning in advance of an announcement later this afternoon shows cogeneration technologies to be big beneficiaries as part of a plan by the Merkel coalition government to spend more on measures to reduce greenhouse gas emissions.
Merkel and Gabriel
From 2016 the money will be used to pay for measures to improve efficiency in the building sector, municipalities and in industry as well as in rail transport.

To meet a target of cutting CO2 emissions in the coal sector by a further 22 million tonnes by 2020, support for combined heat and power generation is due to be doubled to €1.5 billion per year and this will be paid from the cogeneration levy.

The coalition wants to achieve "a fair and equitable" arrangement so as to not overburden Germany's Mittelstand small and medium-sized businesses and household customers, the government paper said.

The document states, “Electricity market issues, promoting cogeneration, CO² reduction contribution of the electricity sector and the network expansion are technically closely interrelated. Therefore, fundamental decisions on these projects should be taken in context.”

Entitled ‘Key points for a successful implementation of the energy transition’ the document produced by the coalition goes on to state, “We need flexibility in the current market to compensate for the fluctuations of renewable energy, but also the swan-effects on the demand side. Flexible power plants, cogeneration, EU electricity trading, load management, storage, e-mobility and other FLE (are needed) to compete in a fair competition for the best solutions.”

“In the future, efficient and climate-friendly cogeneration will play an important role in the energy revolution. However, the future promotion of cogeneration has to be designed so that it is compatible with the other objectives of energy policy. (Otherwise aiming for) a steadily increasing share of electricity produced from renewable energy sources does not make sense.”

The CHP Act is be amended as a result of the decision, with new future expansion target. The technologies potential in terms of flexibility gets recognition in the document and is used as part of the justification for increased investment in heat networks and gas-fired CHP plants.

There is also reference made to gas-fired CHP plants being used to replace coal-fired plants as a means of further reducing CO².



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