German government does not take coal exit compensation for plant operators as a given

The German government says the jury is still out on the question whether the operators of coal plants are eligible for compensation payments once their facilities are taken off the grid in the framework of Germany’s coal exit plan. In an answer to a parliamentary inquiry by the pro-business party FDP, the government says it is currently still assessing the final report by Germany’s coal exit commission, which was published in late January. A price tag for “possible” compensation payments could only be given once the report’s assessment is finalised, the answer given by Germany’s economy and environment ministry (BMWi) on behalf of the government says.
The government also says that the question of electricity supply security in the context of a coal exit had to be addressed in a wider European energy trade context rather than by looking at performance of individual regions and that it will “consult with its neighbours regarding the cross-border consequences of a reduction of coal-fired power production”. It adds that it regards Germany’s nuclear power plants as “part of a European excess capacity” for power production, rather than a key contributor to German supply security. The government also expects a “moderate” increase of power prices by 2030 due to “an isolated coal measure” but adds that prices could also fall, depending on the parallel development of renewable energy sources. Moreover, the government says it assumes that gas-fired power and heat production, especially those of combined-heat-and-power plants (CHP), will play a greater role as coal capacity is taken offline.

The coal exit commission said the government should enter into direct talks with coal plant operators and should apply “regulatory law” if no agreement can be found on compensation payments. Energy company RWE, which operates the coal plants in western Germany, had claimed between 1.2 and 1.5 billion euros for every gigawatt (GW) that is taken off the grid. Not least thanks to the prospect of high compensation payments, investment bank Goldman Sachs recently gave RWE a good rating, despite the company having a hard time coping with the effects of declining power production by its coal and nuclear plants.