Nena News

Wind may overtake German lignite this winter – analysts

(Montel) Wind power may overtake lignite generation to become Germany’s single-biggest source of electricity this winter, potentially forcing utilities to adapt their traditional maintenance timetables, market participants told Montel.

Since the start of December, wind power has generated 29.2 TWh, compared to 27.9 TWh of brown coal-fired electricity, the main source of German power to date, according to data published by the Fraunhofer ISE think tank.

Last winter, wind produced 26.1 TWh in total, lagging as the third largest power source behind lignite on 35.5 TWh and hard coal on 27.5 TWh.

This year’s jump in wind power output was mostly due to the completion of delayed offshore wind energy projects last year, according to Fraunhofer ISE analyst Bruno Burger.

Installed offshore capacity jumped by 2.3 GW to 3.3 GW in 2015, according to official data, while the industry generated about 4,500 full load hours in 2015, roughly comparable to the rate hard coal-fired plants were used.

At the start of this year, total installed German wind power capacity stood at 44 GW, while industrial associations expect another 3 GW of onshore and 700 MW of offshore in 2016.

Wind power’s dominance during the winter months is also likely to continue, as December and January have been the windiest months of the year since 2011, with February also in the top five, Burger said.

Lower winter/summer spread
As a result, the power prices of the three winter months are likely to fall towards the level of the summer months June, July and August, market participants said.

The spread between the winter and the summer months was EUR 6.80 in the winter of 2012/2013 and the summer of 2013, and just EUR 0.40 between last winter and summer, according to Montel data.

“These spreads will continue to narrow further because wind power production is higher during winter,” a Swiss portfolio manager said.

Weaker gas prices will also narrow the spread between winter and summer prices as they will make power production at gas-fired plants – which tend to run more often in winter than in summer – cheaper, said Bengt Longva, an analyst at Oslo-based Nena.

As a result, power prices during the winter months could eventually even below those in the summer, Longva added. That will also depend on whether power plant operators continue to shut down their plants for maintenance mostly during the summer months, which until now has tended to support prices then, said the portfolio manager.

So far this winter, the German Phelix spot price has averaged EUR 26.93/MWh, above forward contracts for the summer months, which are currently trading around EUR 21-22/MWh.


Reporting by:
Andreas Lochner
16:38, Monday, 15 February 2016