Offshore reality hitting home -- An awful lot of electricity

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In northern Germany an 800 MW coal power station under development in the city of Bremen was cancelled last month. Earlier in the summer, another 800 MW coal station earmarked to replace an existing 323 MW coal unit in Kiel was pushed off the drawing board to be reconsidered. For wind power developers, the removal of competitors for electricity network capacity in northern Germany is good news. The huge volume of planned offshore wind development in the region, coupled with proposals for 14.3 GW of conventional generating capacity, is already set to produce far more power than needed.

Conventional capacity in northern Germany today of 16.7 GW, not including renewables, already covers electricity demand in the region of about 90 TWh/year, according to a recent study, Development of Energy Supply in Northern Germany. The overproduction raises questions about where to send the excess power. Already, a net 7.6 TWh of electricity is exported annually from northern Germany, mainly to the Netherlands.

Energy companies are keen to build new coal power stations close to north German ports to reduce the transport costs of imported steam coal. But the overcapacity created, in combination with planned offshore wind energy, will step up the need for power transmission out of the region. With the increasing network costs spread across all consumers, there is no economic pressure on power station operators to build new plant at sites further south -- away from the windy north.

Construction of flexible gas plant more able to match variations in wind power production would make more sense than building coal plant. But with current high gas prices, energy players have been unable to secure long term gas supply deals at prices that make their projects economically feasible.

The scale of the plans for new power plant makes construction of additional high voltage transmission capacity an urgent requirement, states the study. At the same time, it notes that expansion of cross border grid capacity to Denmark in the north and the Netherlands to the west is planned or under way. "But the central question remains as to how competitive the electricity exports will be."

Whether power generated in northern Germany can be profitably exported to neighbouring regions is an open question. If it cannot be, more imports of cheaper power from, say, Scandinavia could lead to even more excess electricity in northern Germany. On top of that, "many neighbouring countries to northern Germany are also building up considerable offshore wind energy that can lead to overproduction in their regions."

If network transmission capacity is expanded fast enough in the region -- and power can be exported profitably -- the generation planned for the north is not a problem, says the report, by Bremer Energie Institut and Arrhenius Institut für Energie und Klimapolitik.

Renewables generation, with guaranteed access to the grid, is protected, at least for now. But the abandonment or review of coal plant construction indicates a new recognition of market realities, including the prospect of North Sea wind power coming ashore.

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