Siemens chief calls for change in market mechanism

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Lothar Balling of Siemens (NYSE: SI) has called for governments to get to grips with the importance of maintaining conventional power plants in response to the unreliability of renewable power.

The Siemens chief also wants governments to take into account the age of technologies when deciding on what sources of power generation to support, and once again called for an end to uncertain legislation-making.
Lothar Balling
In a wide-ranging press conference at the POWER-GEN conference in Vienna, the Siemens Head of Gas Turbine Power Plant Solutions was keen to point out the persistent drawback of overdependence on renewable power, without complemetary fossil fuel back up.

In his presentation Mr Balling pointed out “apparently unpredictable political interventions, especially in Germany, in the areas of renewable subsidies and capacity markets. As a result, investment risk is increased at a time when yield expectations are only moderate. This kind of climate does not encourage new investments in the power market for very efficient, low-emission, and highly flexible plants.”

“It does not surprise, that the eight most important senior executives of European energy companies have publicly spoken with one voice, for the first time in history, issuing a dramatic appeal to governments to create a European energy policy.”

Siemens have within the last year brought into commercial operation three combined cycle power plants in Germany, the Netherlands and France at Knapsack, Hemweg 9 and Toul respectively with the highest performance data in terms of CO2 emissions, flexibility, and fuel efficiency. However these achievements are not being favoured by the current market mechanism.

“All of them are either threatened with shutdown or are working at very low operating hours – because market conditions are not sufficiently supportive of these high-efficiency and clean back-up power sources.

In what he called ‘a market poisoned by uncertainty’, Balling added that a message has been sent that it is not worth investing in new-built gas-fired generation. He disagreed and said that the current prediction for Germany is that by 2022 about 12-17 GW of capacity will need to be built to replace nuclear and fossil plants removed from service – in spite of a tremendous addition of “unpredictable” renewable generation.

“New forces are storming the power supply market and forcing out conventional plants. But these plants are still needed to compensate for weather-induced loss of renewable generating capacity.”

“What is needed is a redistribution of roles. It is time to fight against the trend that has existing plants being displaced from the market by fluctuating energy sources.”

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