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:
- “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)
- ‘BAU -5 GW’: closure of 5 GW of lignite generation capacity compared with BAU
- ‘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