Planned coal exit auctions in Germany unlikely to achieve goals – analysis

Government auctions aimed at shutting down Germany’s hard coal-fired power plants could cost the state about 1.2 billion euros by 2030 but would still not go far enough to meet the goals of the country’s coal exit plan, according to a report by consultancy Aurora Energy Research. Germany’s government-appointed coal exit commission recommended in its final report earlier this year the introduction of state auctions that award so-called decommissioning premiums to operators that voluntarily take their plants off the grid as a way of accelerating the country’s exit from coal-fired power generation.
A new draft law aimed at regulating the country’s coal exit by the German Federal Ministry of Economics calls for operators to offer bids from 2020 onwards indicating at which price they are prepared to decommission their plants. The government would then accept the lowest offers. In its analysis of the proposed auctions, Aurora Energy Research determined that the maximum prices foreseen in the tenders would likely not be high enough to attract enough plant operators to shut down the nearly 13 gigawatts (GW) of hard coal power plants by 2030 as planned. At that point, legally mandated closures would be necessary.
"When considering the maximum price for the decommissioning auctions, the government faces a dilemma," said Hanns Koenig of Aurora Energy Research. "On the one hand, price caps can limit the cost risk for taxpayers; on the other hand, legally mandated closures could lead to lawsuits from operators. This is precisely what the coal commission wanted to prevent with its exit plan.”