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German coal phase-out may prompt power price hikes for non-ferrous sector: WVMetalle

19 Sep 2018

The base metals industry in Germany needs affordable, secure supplies of electricity following any phase-out of coal-fired power generation, WVMetalle President Martin Iffert said Monday in comments ahead of a fifth plenary session of the country's Coal Commission Tuesday.
 
The commission, a 31-strong group of cross-sectoral representatives, has been charged by the government with developing a long-term plan for closing the country's coal plants while preserving security of supply and jobs.
Germany has 25 GW of hard coal-fired power plant capacity and 21 GW of brown coal (lignite) capacity. The country's overall generation stack, including wind and solar power, totals 205 GW.
 
Iffert represents the power-intensive non-ferrous metals industry in Germany, and has warned of the potential consequences of a hasty phase-out, "which threatens to become a contract to the expense of third parties."
 
"In its deliberations, the commission must take seriously the consequences for the electricity-intensive companies," Iffert said. "This also includes talking about compensation as a solution for rising electricity prices."
 
"Electricity must remain competitive and supply security must be guaranteed. This is the only way our industry in Germany can compete internationally. It could not be that the main customers of the electricity produced by the energy industry disproportionately bear the costs of decommissioning coal-fired power plants," Iffert said.
 
A leaked report by one of the commission's four co-leads Saturday called for a total phase-out between 2035 and 2038, with a number of aging plants closing before 2020.
 
In Germany, coal-fired power plants set the price of electricity most of the time. A phase-out of coal-fired generation could add 50% to energy costs for an electricity-intensive industry, WVMetalle said separately, an estimated national burden of Eur240 million/year ($280.5 million/year).
 
According to solar trade group Fraunhofer ISE, hard coal-fired generation has met close to 20% of power demand in Germany in recent weeks, with margins from coal-fired generation remaining strong owing to high natural gas and power prices.
 
S&P Global Platts assessed the delivered Europe, CIF ARA 6,000 kcal/kg NAR 15-60 day price at $98.70/mt Monday, down 30 cents day on day.
 
"It is therefore not enough to feed off the energy-intensive industry with research funding for [carbon dioxide]-neutral production, as current proposals discuss. Providing millions in funding will not compensate for the increase in electricity prices," WVMetalle said, noting that the non-ferrous industry has come a long way towards CO2 neutrality.
 
"We do not need research funding to use even more electricity, but rather an internationally competitive electricity price," Iffert said.
 
"WVMetalle therefore demands once again: before discussing an exit from coal-fired power generation, a comprehensive and reliable impact assessment is indispensable. It has to study in advance the effects on security of supply and electricity costs as well as on climate and global CO2 savings," WVMetalle said.
 
To ensure the competitiveness of the electricity prices, a continuous impact assessment must be run, WVMetalle said.
 
The Wirtschaftsvereinigung Metals (WVMetalle) represents the economic policy concerns of the German non-ferrous metals industry with 655 companies and 111,000 employees.
 
Source: Spglobal