08-08-2016

German coal imports seen stagnating in 2016 after rise in 2015

Coal

Germany will likely import the same amount of hard coal in 2016 as last year, lobby group VDKi said on Thursday, citing rising demand from steelmakers but lower usage in power stations due to rival renewable energy.

Coal is still the backbone of power generation in Europe’s biggest economy, which is seeking to move away from nuclear and fossil power to renewable energy. Two thirds of German coal imports go to power utilities, just under a third to the steel sector, and the remainder to heating providers.

“Imports so far this year are still weak because weather patterns have driven higher renewable generation, but steelmakers are seeing a recovery to normal production levels after a trough,” VDKi’s managing director Franz-Josef Wodopia told a news conference.

“We expect stagnant coal imports for the full year.”

German imports monitored by VDKi’s 70 member companies in 2015 rose to 57.5 million tonnes, up 2.3 percent from 2014, as coal’s relatively low price vis-a-vis gas, due to an industry downturn, raised its uses in the electricity sector.

Germany used hard coal for 18 percent of its 2015 electricity generation, of which 90 percent was imported, while 25 percent of power generation came from domestic brown coal.

Turning to 2016, VDKi chairman Wolfgang Cieslik said that steel manufacturers had reported a 4-percent gain in year-on-year output in May after six months of lower production.

“This shows first signs of a stabilisation,” he said.

But coal-to-power plants struggle increasingly against competition from renewables, which are given priority access to power grids, he said.

Around 30 percent of power already comes from energy that is subsidised at fixed tariffs, although latest reforms will usher in an auction-based system to create market-based prices as from next year.

Still, as a result of the old system an increasing number of coal-fired plants cannot produce at full stretch and keep losing market share.

Germany has legislated to become virtually carbon-free by 2050, through a steady replacement of thermal power with that from wind and solar energy.

Cieslik said that more coal plant closures were on their way, reducing VDKi’s customer base.

Power network operators calculate that by 2030, German hard coal-to-power station capacity will fall by between 12 and 52 percent from 2014’s 26 gigawatt (GW) level, to 11-23 GW.

Germany’s top coal suppliers are Russia, Colombia, the United States and Australia.

Source: Reuters

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