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Germany needs coal to power next winter – analysts

(Energetika.Net) Germany is estimated to have saved 21% of gas year on year in the power sector this winter by turning to coal plants, which will also be needed next winter, analysts told Montel this week.

Between October and January, coal plants produced around 11 TWh, data from German think tank Fraunhofer ISE showed, which energy consultancy Consentec estimates saved up to 25 TWh of gas, or 21% from that used in 2021.

In 2021, German gas plants burned around 120 TWh of gas, data from BDEW showed. BDEW did not immediately respond to Montel's request for information on its 2022 gas usage.

The analysts said they expected coal plants to be needed next winter due to the absence of Russian flows this year.

It would be wrong “to say we are now out of the woods”, said Christoph Maurer, director at energy consultancy Consentec, adding: “We also have to survive the next winter and therefore it is still important to leave as much gas as possible in the storage facilities.”

Coal plants at capacity

Sigurd Lie, senior analyst at Norwegian consultancy Storm Geo, agreed, saying he expected coal plants to produce close to capacity in most weather scenarios also next winter. Europe was “very fortunate” this winter to see mild and windy weather that lowered gas demand, he added.

The German government last year passed a bill to allow older coal units to remain online longer or return to the market from reserve schemes to save gas in the power sector after pipeline flows from Russia dwindled amid the fallout of its war on Ukraine.

Before the war, Germany imported more than half of its gas from Russia.

The usage of lignite and coal this winter helped ease the energy price crisis as they were “significantly cheaper than… gas”, said Lie.

Germany's benchmark front-year power contract soared to EUR 1,050/MWh last August, EEX data showed, and was last seen at EUR 164/MWh on the EEX.

Winter risk

Market participants have warned that it will be much harder to fill storage facilities for next winter, compared with last year, when Russian gas was still in the mix.

Germany's gas storage levels were last seen at 76.3% of capacity, up from 32.4% a year ago, data from Gas Infrastructure Europe (GIE) showed.

The European gas market would remain in a “vulnerable situation” this year with prices and supply disruptions “hard to predict”, said the CFO of Norwegian energy major Equinor earlier today. Demirdag, Montel)



13:45, Wednesday, 8 February 2023