Germany likely to burn coal and gas in power plants beyond 2030 – consultancy

The buildout of Germany’s renewable power capacity is a “herculean task” that will likely take longer than planned and therefore make an early end to gas and coal-fired power production very difficult to achieve, consulting firm McKinsey has found in its 2022 “Energy Transition Index” for the country. “Germany will continue to depend on natural gas,” the consultancy said, adding that coal-fired power production will also continue to play a key role beyond 2030, the year by which Germany’s government said it “ideally” wants to exit the fossil fuel. Russia’s war on Ukraine had “dramatically altered” the situation for renewables in the country, the company said, and the Europe-wide decision to scrap Russian gas imports would have an impact on the power sector as well, where flexible gas-fired plants are currently used to cushion short-term grid fluctuations due to intermittent renewable power production.

While the share of renewables jumped from 41 to 49 percent of power demand in the country in the first half of this year, the energy transition would face “the greatest test in its history,” according to the consultancy. As gas continues to play a role in all scenarios, the focus should be put on diversifying supply and substituting natural gas with green hydrogen, McKinsey partner Thomas Vahlenkamp said. In order to make progress on the ambitious target of sourcing 80 percent of electricity consumption from renewables by 2030, the entire production and supply chain would have to be strengthened by investing in production capacity and staff, as well as by easing regulation on infrastructure construction. The country would have to install 18 gigawatts (GW) of solar panels and commission 1,800 new onshore wind power turbines per year, while offshore would have to quadruple.

While the continued use of natural gas has long been considered a "bridge technology" for Germany on its path to an energy system fully based on renewables, the supply crisis has fanned calls for a faster transition away from the fossil fuel. Germany plans to end its use of coal-fired power production no later than 2038 but the government has promised to end the technology's use significantly earlier. Due to the gas supply crisis, the government has re-activated already decommissioned coal plants.