ICIS analysis – Switch from coal to gas unlikely in Germany

Germany is unlikely to switch emphasis from coal to gas-fired power generation in the immediate future.
Irsching gas-fired power plant
That’s the verdict recorded by ICIS website, after a survey by its analysts of energy supply firms and trading houses in the country.

German gas-fired power plants have moved towards profitability this winter, but coal power facilities continue to have the upperhand.

There are increased subsidies for new, efficient gas-fired power plants but oversupply is keeping coal prices low and European emissions allowance prices are failing to encourage a switch to more environmentally friendly fuels.

Most authorities contacted in Germany say gas is unlikely to become consistently more profitable than coal in the foreseeable future, with one saying that it is “not even on the horizon.”

“There is a long way to go for that,” said another trader. “With power so weak there would have to be a lot of additional gas supply to accelerate the price drop compared to power.”

“Or we would need some big regulatory action,” he continued. “The CHP [combined heat and power] subsidies aren’t enough to incentivise gas-burning.”

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