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Home/Impacts on the German power market from the closure of lignite power plants

Impacts on the German power market from the closure of lignite power plants

In this independent study on behalf of Zukunft Erdgas, the German gas industry initiative, Aurora analyses the effects of a partial phase-out of lignite-fired power generation in 2023 on the German electricity market, in particular on the capacity utilisation of the German gas-fired power plant fleet. Aurora compares three scenarios:

  1. “Business-as-usual” (BAU): no closures of coal-fired power plants beyond previously announced shutdowns; other market developments (e.g. renewable energy expansion) in accordance with current regulatory and economic factors (e.g. “mothballing” unprofitable generation capacities in the short term)
  2. ‘BAU -5 GW’: closure of 5 GW of lignite generation capacity compared with BAU
  3. ‘BAU -9 GW’: closure of 9 GW of lignite generation capacity compared with BAU

2023 was selected as the year for all quantitative evaluations, as the phase-out of nuclear energy will be completed by then. The study contains the following key results:

  • The closure of 5 or 9 GW of lignite-fired power plants would have a moderate impact on the wholesale market prices for electricity: the closure of 5 GW would increase the prices by 2 EUR/MWh compared to the business-as-usual scenario without intervention, the closure of 9 GW would increase the prices by 4 EUR/MWh.
  • The decommissioning of lignite-fired power plants significantly reduces annual lignite-fired generation by 36 TWh (5 GW) and 59 TWh (9 GW) respectively. About half of this electricity is replaced by domestic generation (from coal-fired and gas-fired power plants) and half by imports.
  • The capacity utilisation of gas-fired power plants without heat output increases considerably due to the closure of lignite-fired power plants, from 28% without intervention to 38% (5 GW) and 45% (9 GW) respectively.
  • The closure of lignite-fired power plants will lead to considerable CO2 savings in Germany: emissions in the electricity sector fall by 32 million tonnes of CO2 or 10% in the 5 GW scenario and by 58 million tonnes of CO2 or 18% in the 9 GW scenario.
  • Dispatchable capacities and the expected generation of renewable energy sources is sufficient in all scenarios under normal conditions to cover the typical peak load of 82-84 GW. Interconnectors with neighbouring countries would be available as additional protection in case of power plant outages.
  • The reduction in lignite-fired power generation relieves the north-south grid bottleneck, as the lignite-fired power plants are located north of the main grid bottlenecks


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