While renewable energies play an increasingly important role in the German electricity mix, some conventional power plants are still needed as backup supply. Manfred Ungemach and Markus Przytulski compare the parties’ positions on how to keep conventional power plants on the grid while their operation becomes increasingly uneconomical.

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We continue our series (Part 1, Part 2, Part 3) on the competing parties’ agendas for the upcoming federal elections, this time focusing on the parties positions on how to close the supply gap renewable energies leave, what will be the future of conventional power plants, and how to incentivize the availability and construction of back-up power plants. All German parties are committed to the “Energiewende” and therewith to developing an energy supply system which is mainly fed by renewable energies. But it is also clear that any supply system fed by renewable energies needs back-up to guarantee a steady energy supply and avoid outages, and that storage will not be available at reasonable costs in the near future. However, despite these undisputable economic and technical facts, the role of conventional power plants remains rather controversial.

Introduction

A major issue of the “Energiewende” is to provide a steady energy supply, even though renewable energies have periodic production ups and downs. Conventional power plants are still a guarantor of steady energy supply. However due to the low incremental costs of renewable energies the market prices for energy dropped rapidly. As a consequence of this developement it became less profitable, and even loss-making to operate conventional power plants. For that reason the President of the Federal Cartel Office (Bundeskartellamt), Andreas Mundt, elaborates that it is of tremendous importance to balance the development of renewable energies, grid expansion and the adjustment of the conventional power plant complex. According to Mr. Mundt that is the only option to control the costs of the “Energiewende“. While the low exchange price for energy and the fact that an “energy only”-market does not provide clear signals for long-term-investments in generation capacity is singled out as a problem, the main question the parties will have to answer is how to procure for the profitability of conventional back-up power plants, while avoiding to increase the energy costs for consumers and industry by introducing another support scheme.

CDU/CSU (Christian Democratic Union/Christian Social Union)

The CDU/CSU endorses an energy-mix, which balances renewable energies and conventional power plants for a steady energy supply. CDU/CSU acknowledges the lack of profitability of conventional power plants and in terms of a new market design warns that conventional power plants might have to be subsidized. Therefore CDU/CSU want to ensure higher exchange prices for energy, which would lead to a lower EEG surcharge and subsequently higher profitability of conventional power plants as part of the proposed energy mix. CDU/CSU wants to solve that issue with a market structure adjustment, which incentivize the building and operating of modern power plants to procure for a stable energy supply. The CDU/CSU’s election program identifies black coal, brown coal, and modern gas-fired power plants (CCHP as well as peaking turbines) as conventional technologies which are desired to be part of the proposed energy mix.

SPD (Social Democratic Party of Germany)

The SPD’s election program provides for an avowal of Offshore wind farms. Also the SPD does acknowledge the need for technologies to bridge the gap. The SPD identifies modern black coal and gas power plants as desirable technologies. In addition, the SPD stresses the development of cogeneration laying out the goal that by 2020 25% of the energy supply should be covered by cogeneration. The problem of profitability of the building of new and the operating of existing conventional power plants is not addressed in the SPD program.

FDP (Free Democratic Party – Liberals)

Also the FDP endorses the development of high-tech conventional power plants to bridge the gap renewable energies leave. However, in terms of market design the FDP fears that the planned introduction of a capacity market in France in 2015/16 may take away the last bit of profitability from the operators of German conventional power plants and endorses a public discussion on this matter. The FDP does not propose a specific strategy on how to increase profitability of conventional power plants, though the program recognizes the problem.

B’90/Die Grünen (The Green Party)

The Greens, as one would expect, emphasize the importance of renewable energies. However, they acknowledge the issue of supply stability and suggest to exclusively use modern gas turbines to solve that issue and phase out all coal and lignite-fired power plants until 2030.

As the SPD, the Greens lay out the goal to cover 25% of electricity demand with cogeneration by 2020. Additionally the Greens suggest to decentralize the energy supply. How such an approach can make investments in modern gas turbines viable is not further explained. Moreover, the Greens do not address the issue of profitability of conventional power plants.

Die Linke (The Leftist Party)

The Leftist Party takes a very strict approach. It wants to close the existing capacity gap with communal cogeneration facilities and adopt a coal power phase-out act, prohibiting the construction of new coal-fired power plants and terminating the operation of all coal-fired power plants by 2040. Furthermore the Leftist Party wants to turn off all nuclear power plants immediately. That would certainly increase the gap which is to be filled. The issue of profitability of conventional power plants is not addressed by the Leftists either.

Conclusion

In the end the parties’ positions on conventional power plants as bridging-the-gap technologies differ a lot. However, issues of costs and profitability are more or less being left out in the cold. CDU/CSU is the only party addressing the issue of profitability and the FDP at least recognizes the existence of such issue. The other parties do not address the issue.

The question of which technologies are deemed fit for bridging the gap his heavily debated between the parties. CDU/CSU and FDP agree on most bridge technologies, but SPD and Greens might have a long discussion on those technologies during potential coalition negotiations. The SPD promotes the operation of modern black coal power plants, whereas the Greens are strictly opposed to the usage of black coal. Both parties cannot be expected to give up early in this discussion, as many SPD-voters have a background in the coal mining industry and as the coal-phase out is a main concern of the Greens and therewith one of their support bases.

In the next part of the series “2013 Election Energy Party Profiles”, we will analyse the parties’ positions on the necessity of a new market design which includes renewables in the market and also may provide solutions to incentivize investments in new generation and storage capacity as well as demand-side management measures.

Sources: CDU/CSU, SPD, FDP, B’90/Die Grünen, Die Linke, bne-Kompass 02/2013

This article by Manfred Ungemach and Markus Przytulski first appeared as part four of a multi-part series on German Energy Blog.