Will wind turbines join German nuclear in 2022? Some may no longer pay off

Thousands of German wind power plants will lose the financial support provided for renewable electricity generation in 2020. By the end of 2020, around 4.5 GW of installed wind capacity will no longer receive support, and the economic viability of their continued operation may be questioned in some cases. 

The reason for the sharp decline is a provision in a 2000 law that provided support to all power plants for 20 years. For plants already in operation, 2000 is counted as the beginning of the 20-year period. Operators will subsequently have to rely on revenue from selling electricity on the exchange, which could be problematic if current low electricity prices persist.

New costs will also emerge, adding to existing costs such as land leases. A number of technical and administrative operating permits are designed specifically for 20 years, and renewing them is naturally a financial burden.

A study by the Windguard think tank states that an exchange electricity price of around 40 EUR/MWh will be necessary for profitable operation after 2020. If current prices of around 30 EUR/MWh are maintained, most operators would make a loss.

Given that the plants first to lose support are generally not as efficient, some operators may consider replacing them with more modern and efficient equipment. From 2020, however, auctions are planned with a volume of just 2.9 GW, while support from auctions is generally lower than direct support in the form of feed-in tariffs.

Some organisations see the solution in an accelerated phase-out of coal-fired electricity generation, which would signal rising electricity prices. The upcoming EU ETS reform is also very likely to be reflected in electricity prices at the beginning of the next decade.

By 2002, Germany already had nearly 12 GW of installed wind power capacity. The same amount of capacity will therefore lose support for electricity generation by 2022 at the latest. The last nuclear power plants are also due to be retired that year, meaning Germany is expected to lose a further 9 GW of installed capacity in 2021 and 2022.

Coal-fired power plants should also gradually be phased out. In September last year, the first of several lignite-fired power plants (the Buschhaus power plant) was shut down and placed in the reserve system. A total of 2.7 GW of lignite-fired power plants is to be shut down by 2019.

Source of the lead image: Flickr @CopperCatStudios

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