Germany launches tenders to phase out hard coal plants

Germany’s Federal Network Agency (BNetzA) has announced the launch of tenders aimed at reducing coal-based electricity generation in hard coal and small-scale lignite plants in accordance with the country’s coal phase-out act. Bidding for a total of 4 gigawatts of capacity is set to commence on 1 September 2020. "The tenders create an incentive to quickly remove the most climate-damaging hard coal power plants,” said BNetzA head Jochen Homann. “At the same time, security of supply remains guaranteed.” The tenders will be carried out between 2020 and 2027, as stipulated by the law. Hard coal plants that are still in operation and small brown coal plants of up to 150 megawatts are eligible to participate in the tenders. As part of the process, plant operators state a bid value at which they are willing to refrain from burning coal in their plant and receive appropriate financial compensation if they succeed, which also depends on the expected CO2 emissions reduction. Operators who are awarded contracts are entitled to a one-off payment of the hard coal surcharge when the prohibition on coal becomes effective. In return, they will no longer be allowed to burn hard coal or lignite in their plants. The maximum price in the round is set at 165,000 euros per megawatt net nominal capacity.

The German parliament approved legislation in July to end coal-fired power generation by 2038 at the latest. The law sets out a shutdown schedule for individual lignite power plants, compensation payments for operators and auctions for hard coal plant operators to take capacity off the grid according to the government's timetable.