Germany Needs More Gas Power Plants: Utility, Lobby

By Vera Eckert

ESSEN, Germany (Reuters) - Germany must support the construction of gas-powered generation to avoid an electricity supply crunch as it pulls out of nuclear and coal and electric vehicles increase demand, utility Uniper and gas lobby Zukunft Erdgas said on Tuesday.

Calling for a so-called capacity market to pay providers to maintain spare back-up generation, they said the construction of gas power plants had slowed during the transition to massive reliance on wind turbines and solar panels.

Power cannot yet be reliably stored and Germany needs up to 82 Gigawatts (GW) of capacity at all times to function, increasing to 114 GW by 2030 when millions of electric cars begin to hit the roads, figures from the Cologne research institute EWI said.

"There has to be a consensus on how we want to safeguard supply security in future," Andreas Schierenbeck, chief executive of Uniper, which operates 3.3 gigawatts (GW) of gas capacity in Germany, told a news conference at the E-World fair.

"As long as that has not been clarified, nobody will build power plants and invest in modern technologies," he said.

EWI data showed 5.2 GW from gas-fired plants and 1.7 GW at the Datteln 4 coal power plant are in the pipeline until 2030.

But the combined 6.9 GW is far less than an anticipated 13-45 GW of new conventional power capacity needed to make up for losing nuclear generation by 2022, as well as much of Germany's coal capacity, EWI said.

So far, the government has relied on wholesale power prices to spur investments. It has also mandated some reserve capacity to be built and sought imports from neighbours.

But these measures and market forces did not give enough incentives, EWI said.

"We think this has to be thought through anew," Simon Schulte, its head of gas, said.

Nuclear supplied around 12% and coal 28% of electricity last year, green power stood at just over 40%, gas at 15% and the remainder came from biomass, waste and oil.

Germany wants to derive 65% of power from renewables by 2030.

"We need to have mostly gas as the remainder," said Timm Kehler, head of Zukunft Erdgas.

In Europe, France and Britain have capacity markets, while Italy, Poland and Portugal are planning them, and Sweden and Finland operate strategic reserves schemes.

Schierenbeck said Germany's neighbours had lower power prices, showing capacity support schemes did not hurt, but they are contested. Environmental campaigners complain they amount to state subsidies for fossil fuel and the better solution is to develop battery storage.

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