Siemens May Build Gas-Fired Power Plant in Germany

Tuesday, Apr 19, 2016
Siemens May Build Gas-Fired Power Plant in Germany

Siemens cleared a regulatory hurdle on Monday in a bid to build a gas-fired power station in southern Germany, a rare event in a country where a drive for renewable energy has made many traditional sources of power unprofitable.

It would be the first gas plant order in Germany in four years for Siemens, whose chief executive said last year he had resigned himself to never selling another gas turbine in his home country.

Germany's cartel office has approved the plant in Leipheim, north east of Ulm in Bavaria, which would be built by Siemens and Stadtwerke Ulm, a utility in Baden Wuerttemberg. It still needs approval from European Union competition authorities.

The gas-fired plant is designated as a reserve power plant for Bavaria where the neighbouring nuclear power station Gundremmingen will be switched off in two stages, 2017 for block B and 2021 for Gundremmingen C. Reserve power plants can earn more money, making a gas-fired option more commercially viable.

A Siemens spokesman said the project was still awaiting approval from European cartel authorities. "We cannot yet give any further details."

He also said that a firm order would only materialise after the consortium had been fully established.

Bavaria currently gets a third of its power from renewable sources, including solar, hydroelectric, biomass and geothermal.

But the state, like Germany as a whole, still needs some conventional energy capacity to guard against supply swings in a region that is home to carmakers BMW and Audi that are heavy energy users.

Coal is usually chosen to fill this gap because it is cheaper than gas-fired power. Coal-fired power plants currently earn 7.70 euros per megawatt hour of 2017 baseload production sold ahead in the wholesale market, while those of gas-fired capacity lose 3.7 euros/MWh Thomson Reuters data shows.

But analysts say that gas plants operating in the reserve market for power in Germany that can switch on quickly when there is a shortfall can earn extra money, making them commercially viable.

The Welt am Sonntag newspaper had reported on Sunday that the job could be worth up to half a billion euros for Siemens ($565 million) for a 600 megawatt (MW) plant.


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