Comments on: EU admits ‘mistake’ in state aid decision for German coal plants https://www.euractiv.com/section/electricity/news/eu-admits-mistake-in-state-aid-decision-for-german-coal-plants/ EU news and policy debates across languages Wed, 13 Feb 2019 19:58:06 +0000 hourly 1 https://wordpress.org/?v=4.9.9 By: Mike Parr https://www.euractiv.com/section/electricity/news/eu-admits-mistake-in-state-aid-decision-for-german-coal-plants/#comment-335745 Thu, 06 Sep 2018 07:43:16 +0000 https://www.euractiv.com/?post_type=news&p=1268206#comment-335745 This is a very interesting article with several contradictory statements. For example:

“planned phase-out of state aid to fossil fuel power generation across the European Union could make the Ostrołęka C coal station project unprofitable within years”

and the comment by PGE: “….. If somebody is rationally thinking about new investments in coal power generation with a price of €20 and possibly higher due to the reform of the EU ETS, then they probably don’t have realistic assumptions,”

Perhaps PGE is hoping that the E20 price for EUAs is a blip? If it is not (and perhaps prices will go higher?) then coal looks like a dead duck. There is another problem with coal – it needs lots & lots of cooling water. This summer was very long, very hot and very dry. How does that work for coal stations – with or without state aid, with or without high EUA prices? How do coal stations fulfil their “standby role” in such conditions? We have been here before – Poland had problems a year or so back, the French with their nuclear fleet have to regularly curtail in-land stations in the summer.

Much of the current discussions could be characterised as short-term manoeuvring (deck-chair re-arranging?) by various parties to wring the most out of old assets. Absent from discussions is any strategy supported by tactics to move from what we have (a cobbled together mix of ageing CO2-based generation and various RES generation – shoehorned into a power network designed for the CO2 age) to something fit for 2050. In short there is no trajectory to get the EU to 2050 when the electrical generation fleet for all intents and purposes must be zero emission.

As for “state aid” perhaps it is time to revisit the definition with respect to power generation whilst also looking at the WACC for various forms of RES generation and government involvement as a risk-taking partner in generation investments. Remind me where interest rates stand now with respect to gov bonds? Remind me what the WACC for wind and other RES tech is? Now compare & contrast.

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