Finance

High gas prices mean golden times for coal-fired power stations

“The coal-fired power stations in the Netherlands are running at maximum,” says spokesperson Michel Groeneveld of the German electricity producer Uniper, which has a large coal-fired power station in Rotterdam. “Because the demand is there and the prices are good.”

And that’s not good for the environment. According to Milieu Centraal, coal-fired power stations are twice as polluting as gas-fired power stations.

The intention of the Dutch government is that they close in 2030. But now the power stations of Uniper, Onyx (both on the Maasvlakte) and RWE (Eemshaven and a combined biomass power station in Geertruidenberg) are running faster than ever.

screwed up

According to Groeneveld, coal-fired power stations usually only run at about 80 percent or less of the capacity they have. This will be increased if other sources fail or if demand increases. “We now also want to use and sell that last 20 percent.”

According to the International Energy Agency (IEA), coal is suddenly popular again everywhere. IEA today presented the state of play in the global energy market. This shows that this year the use of coal is old-fashioned high again after a dip last year.

Despite the worldwide agreement that the use of coal must be drastically reduced in order to meet climate ambitions.

China is heating up like crazy

The IEA says that the demand for coal will grow by 4.5 percent this year, which is above the level of 2019. The strongly increased demand for electricity, especially in Asia, is the main cause of this, according to the IEA.

China is dependent on coal for half of its energy production and will only burn more in the coming years. But demand for coal is also increasing in the United States and the European Union. Because gas prices have risen so fast, coal-fired power stations are being fired more quickly, the IEA also sees.

Coal is also important here

Uniper has a coal-fired power station on the Maasvlakte and accounts for about a third of electricity production from coal in the Netherlands. All coal-fired power stations together still account for 15 to 20 percent of the peak demand for electricity in the Netherlands.

That extra production is now extra lucrative, because it can be sold at the current high market prices. This is in contrast to the majority that has already been sold through long-term contracts.

“The margins for the latter part are a lot higher”, says Groeneveld. “Of course, purchasing extra coal has also become more expensive, just like the CO2 certificates that we have to buy; but the price of electricity has risen even faster.”

On the EPEX power exchange, demand at peak times is now more than 200 euros per megawatt hour. Earlier this month there was an outlier to 300 euros. And that while the price in January was still around 50 euros. Electricity prices have never been so high in the Netherlands.

Also because it’s not windy

According to the operator of the high-voltage grid, Tennet, the additional use of coal is now extra interesting for energy producers from a commercial point of view. “It is more profitable now,” said spokesman Jorrit de Jong.

According to him, this is also because not all the potential of wind energy could be used in recent times.

“There has been little wind at night in recent months. Then producers have to use coal and gas. Although we have also imported more hydroelectric power from Norway. With the high electricity prices, it is now also interesting.”

Last time super win

The port of Rotterdam already reported a record transhipment of coal last summer. Coal that is now ready for production at the power stations.

But it could well be the last winter in which the coal-fired power stations will be switched on extra. From next year, the House of Representatives wants coal-fired power stations to be used for a maximum of 35 percent of the capacity. In doing so, the cabinet hopes to comply with the Urgenda judgment.

The lawsuit lost by the government forces the government to act quickly to achieve more CO2 reductions. But the coal-fired power stations want substantial compensation for this capacity reduction.

Close

The Ministry of Economic Affairs and Climate has now made a proposal to the American owners of the coal-fired Onyx power station in Rotterdam to close the power station. The company wanted compensation of a quarter of a billion euros.

In 2030, coal will be finished anyway. The power stations must then be closed or converted to operate entirely on biomass.

In addition to Tennet, the electricity producers Uniper, RWE and Onyx were approached for this article. The latter two declined to comment on the coal use questions. The coal transhipment companies OBA in Amsterdam and EMO in Rotterdam also did not respond to questions about this.

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