Germany has an “energy-only” power market, meaning that all payments are based on the kilowatt-hour. If a plant does not run much, it earns less – and gas turbines are suffering the most. But as Craig Morris points out, Germany is a bit of an exception within the EU – for how much longer? As I wrote in a recent post, the growth of wind and solar power are pushing into the medium load and increasingly into the baseload, meaning that gas turbines are already largely offset, with coal and nuclear plants coming up next. This capacity will therefore be used less and less, thereby becoming less profitable – yet, the need for dispatchable capacity in Germany remains unchanged. The situation is similar in many countries. In France, E.ON has announced plans to close a gigawatt of coal-fired capacity, and GDF Suez aims to mothball three of its gas turbines in the country. In Germany, E.ON has agreed to keep its gas turbine in Irsching on standby for the next three years because the facility … Continue reading Has the age of capacity markets only just begun?