Coal to have a future in Europe’s energy mix
By Jackie Cowhig
LONDON, June 15 (Reuters) – Germany will need to burn more coal from this year as it grapples with balancing phasing-out nuclear energy against CO2 emission cut targets, E.ON EONE.UL group board member Jorgen Kildahl said on Wednesday.
“Germany as a whole will need to burn more coal starting from this year, but I can’t say how much just that it will be more,” Kildahl told the Reuters Energy and Climate Summit.
Germany has already shut eight nuclear power plants and will shut three more by the end of this decade as part of an accelerated exit from atomic power by 2022.
Germany’s exit from nuclear power caused spot coal prices to rise by $3.00, briefly, in May, as German generators bought extra coal for consumption through the rest of 2011.
This was a short-lived blip in prices because the German move had already been factored into prices, utilities and traders said in May.
Germany is likely to need an extra 2 million tonnes of coal this year from the spot market, utility sources said in May, not large enough to re-balance the oversupplied European market.
German power generators including E.ON are investing in renewable energy to partly fill the gap between power supply and demand but the unpredictable supply of wind and solar energy will make the country more reliant on fossil fuels, gas and coal to provide steady baseload power, Kildahl said.
“The provision of baseload power without the nuclear plants will inevitably mean more reliance on fossil fuels including coal in Germany,” he said.
“I think there will be a mix of technologies going forward – gas, some coal, wind,” he said, talking about European power generation as a whole as well as Germany’s particular situation.
“E.ON’s ongoing coal-fired generation projects in Germany will be realised,” Kildahl said.
The natural fuel to fill most of the generation gap left by nuclear will be gas because of its lower carbon costs, he said.
ASIA/LATIN AMERICA COAL EXPANSION
Kildahl said E.ON was committed to growth in both power generation and energy market trading to become a large, global energy player.
Within this broad context, E.ON was looking at a variety of investment opportunities to trade new markets and in various parts of the world.
“A shortlist of potential countries to invest in will be drawn up by the autumn but I wouldn’t want now to highlight any countries in particular. It would be too early,” Kildahl said.
He said countries in Asia apart from China and India, such as Malaysia, Indonesia, Vietnam, South Korea, were all experiencing strong power demand growth and offered trading opportunities.
Latin America, led by Brazil and Chile, is also seeing strong growth in generation and energy need.
However, Kildahl acknowledged that, without getting into specifics, any strategy for global growth would have to include Asia, where generation is likely to remain dominated by coal because it is the cheapest fuel in many cases.
E.ON already had a coal trading presence in Asia, he said.
“I would not rule out coal-fired investments in Asia as part of E.ON’s overall strategy for expansion but these will depend on what people want in those countries in which we’re interested,” he said. “It’s too early to say specifically where but we have already the toolkit and competence in gas, coal, power, carbon in all these technologies.” (Editing by James Jukwey)