Germany unlikely to meet Energiewende’s 25% CHP target

The rapid growth of renewable energy and lower power prices in Germany as a result of it’s ‘Energiewende’ energy transition has dampened growth in combined heat and power (CHP) plants, according to the Point Carbon team at Thomson Reuters. As a result, the Energiewende target for CHP of 25% of total power production by 2020 will not be met.

‘The Energiewende is a double-edged sword for CHP,’ said Clémence Carnerero, Point Carbon Power Analyst at Thomson Reuters. ‘The Energy Transition incentivised vast expansion in renewables, which has resulted in an overcapacity in the market and lower power prices. In fact, we currently expect 2014 to be delivered at a 12-year low. The current situation is hampering the economics of gas-fired CHPs particularly and we estimate that their number of running hours has fallen by roughly 80% between 2009 and 2013. As a result, several plants are requesting closure or mothballing.’

As of October 2014, 48 units or around 13 GW of capacity had applied for closure or mothballing to Germany’s Federal Network Agency, including 5.2 GW of CHP. CHP was envisioned under Energiewende as a key technology to aid in the transformation of the energy system.

The pace of CHP expansion is not catching up with the target path and market conditions are unlikely to improve in the short or medium-term, preventing CHP from reaching its full potential, says Point Carbon. The organisation’s forecast says that CHP will form a maximum of 22% of German power production in 2020.