Profit margins for coal-fired power plants to produce electricity for delivery in Germany next year have rebounded and reached their highest level this year, S&P Global Platts data showed.
The German year-ahead clean dark spread (CDS) for a 35% efficient coal plant rebounded to Eur0.28/MWh by Monday's market close as coal prices eased slightly, while the stronger euro after the French elections reduced dollar-nominated coal costs further for eurozone buyers.
At the same time, the German year-ahead clean spark spread (CSS) for a 50% efficient gas-fired plant remained at minus Eur5.56/MWh with the spread between the oldest coal plants and modern gas plants widening again to almost Eur6/MWh after shrinking last November to just Eur1/MWh, which was its narrowest since 2011.
The gap between older coal and modern gas generation margins in Germany was Eur20/MWh three years ago with most gas plants uneconomic to run, but changes to the global supply-demand balance have narrowed that gap with modern gas plant increasingly pricing the oldest coal plants out of the market.
However, average efficiencies for the German coal plant fleet have also improved with 7 GW of highly-efficient (45%) coal plants coming online over the past years, while the most recent coal closure was at a plant with around 38% efficiency (Voerde).
The year-ahead clean dark spread (CDS) for a 45% efficient coal plant reached Eur5.75/MWh, the data showed.
Front-year coal into Europe fell over $1/mt Monday to close just above $65/mt, pulling outright Cal 18 baseload power to Eur29.45/MWh.
The euro rose to a five-month high against the dollar following relief about the outcome in the first round of the French presidential elections. EUA carbon allowances remain relatively flat below the Eur5/mt mark after spiking briefly above Eur6/mt at the start of March.
Lower carbon prices favour more carbon-intensive coal-fired power plants.
While coal keeps dominating the German power mix with domestic lignite plants outperforming hard-coal plants and a continued combined share of over 40% in the power mix, gas' share is set to rise further in future after gas plants registering the only gains across conventional power plants in 2016.
According to the BDEW's annual power plant list, some 15 gas-fired power plant projects with a combined capacity of 8.7 GW are awaiting their final investment decision.
However, due to the continued negative framework conditions, question marks remain on some investments into new gas-fired power plants, the BDEW said Monday.
Improved government support for combined-heat-power plants already saw some new gas-fired CHP projects in urban areas emerge, while the government also pledged subsidies for 2 GW of new CCGT projects in the South to help stabilize the grid amid looming closures of 26 GW of conventional plant capacity by end-2022.
