Germany is currently in the process of turning their natural gas power plants back on. Uniper, a major supplier of electricity in Germany and Europe, are about to switch to more natural gas power plants as higher costs of carbon allowances have meant it’s more effective and cost efficient to use natural gas plants instead.
The price of gas is currently at a low which is also beneficial for the gas power plants as it means that electricity can be produced at a cheaper cost. Uniper are planning on bringing back as much as 3.5 gigawatts of power form gas power plants. The reason the plants had stopped being used was because it became much more cost effective for Uniper to use coal power plans to produce their electricity. 3.5 gigawatts is almost a third of its total gas power plant capacity.
Over summer coal prices became very high whilst gas became very cheap, which has in turn led to this change in preference in power plants. This shift represents how volatile the industry of generating electricity can be, especially due to changing economics. The chancellor of Germany, Angela Merkel, is aiming to phase out all fossil fuels. However, in recent years emissions from fossil fuels have risen, this has been put down to the fact that Germany are transitioning away from nuclear power and have therefore had to use coal to make up for the lack of nuclear power.
The German Government now plans to remove both the coal and nuclear power plants from producing the countries power. At this current moment in time, that would be a reduction in 50% of Germany’s power generation capacity. Increased carbon costs have made this shift more realistic as it has made it even more beneficial for companies to switch from coal to gas power plants.
The switch to natural gas power plants will also lead to a reduction in pollution for the nation. When burning, natural gas releases 55% less carbon dioxide than what coal does which is an ideal steppingstone in the country meeting its climate commitments. The gas plants could be used to subsides the production from renewable sources until there’s enough wind farms and solar plants to provide a reliable and sustainable amount of energy.
Currently, gas prices on average are 40% lower than this time last year so Germany has made the most of this and purchased plenty of gas. This means that storage levels are near capacity and at the highest levels seen in the past 5 years. If Uniper were to use all their capacity in power generation from gas plants, then they have a capacity to produce 10 gigawatts of power. However, Uniper would also be one of the companies hit hardest by Germanys plan to phase out 5 gigawatts use of hard coal, which could be by the year 2022.
Uniper are currently in the process of building another coal power plant in Western Germany with a 1 gigawatt capacity. They are adamant the plant will still open next year even with the government’s plan to finally phase out all coal power plants.
Climate change data from 2017 stated that Uniper are the fifth largest contributor to greenhouse gas emissions within the power sector in the whole of Europe.