EON Seeks Support for Newest Gas-Power Plant in Regulator Talks

EON SE, the largest German utility, is seeking support for its newest gas-fired power station in talks with the regulator as electricity generators burning the fuel rather than cheaper coal struggle to turn a profit.

The Irsching 4 plant, opened less than two years ago, joins the company’s earlier Irsching 5 power station in looking for help, according to the Dusseldorf-based energy producer.

“Irsching 4 is facing similar problems as Irsching 5 and we’re looking for a similar solution,” Christian Drepper, a spokesman at EON, said by phone from the company’s home city.

The company, which has been negotiating with grid regulator Bundesnetzagentur and network operator TenneT TSO GmbH over the future of the 845-megawatt Irsching 5, said Dec. 7 it wanted “economic compensation” for the owners of the power plant.

Irsching 5 operated less than a quarter of the time in 2012 as slowing economies cut power prices. The plant is struggling to compete with wind and solar generation that gets preferential access to the grid, and coal-fired stations that benefited from a slump in the cost of carbon permits needed to burn the fuel. Irsching 4, with a capacity of 550 megawatts, is the world’s most efficient combined cycle gas turbine plant, EON says.

“Even state-of-the-art gas-fired power plants cannot be operated profitably,” Daniel Seidenspinner, an analyst at B. Metzler Seel Sohn & Co. KGaA, said from Frankfurt. “That confirms how much renewable energies affect the profitability of conventional power plants. The runtime of the power plants declines and also the wholesale prices for electricity.”

Spark Spread

Natural gas fueled 11 percent of Germany’s power output last year, down 2.3 percentage points from a year earlier.

The difference between the cost of fuel and the price paid for the power generated, the so-called spark spread, for the month ahead was minus 22.42 euros a megawatt-hour today.

“We are not willing to run loss-making plants where we don’t see any chance of a recovery,” EON Chief Executive Officer Johannes Teyssen said in January. “It’s not possible to operate gas-fired power plants however clean, efficient and good for the climate and the country they may be.”

Germany needs flexible gas plants to underpin renewable sources if the country’s exit from nuclear power is to succeed, German Environment Minister Peter Altmaier said the same month.

The grid regulator wasn’t immediately able to comment.

Before it's here, it's on the Bloomberg Terminal.