Higher day-ahead German power prices have improved generation margins for coal-fired units, prompting operators to de-mothball units earlier than expected.
Essen-based utility Steag has brought forward the start up date of its 715MW Bergkammen A coal-fired unit to 28 September, from a previously expected 1 October, "owing to prospective electricity prices and thereby connected opportunities for coal-fired generation in the coming week", the utility said today. The unit has been mothballed since 1 April as market conditions were not favourable to run it in spring or summer.
Steag's decision followed utility RWE's notice last week, anticipating the return of 838MW Ibbenburen unit on 23 September, also brought forward from October, given improved margins.
Bergkammen A and Ibbenburen have an estimated efficiency of 38pc. Working day-ahead clean dark spreads for these units averaged minus €9.27/MWh in the second quarter of this year and minus €4.52/MWh from July-August.
But they have improved this month, supported by a faster increase in power prices that have allowed even less efficient units to run for more hours. Clean dark spreads for a 38pc unit have averaged €5.14/MWh so far this month and spreads for a 36pc unit have averaged €2.82/MWh, Argus data show.
German working day-ahead power prices have increased by 26.6pc on the month, while coal prices by only 6.5pc, according to Argus' over-the-counter assessments.
Fundamentals
German coal-fired generation has averaged 5.57GW so far this month, compared with 2.94GW in August and the highest for any month since January, European transmission system operators association Entso-e data show. Output peaked at 9.56GW on 15 September, the highest for any day since 4 March.
Lower than average wind power supported the call on coal-fired generation. Combined onshore and offshore wind has averaged 8.94GW so far this month, the lowest for any September period in the last three years. Nuclear power availability continues at 7.5GW.
Higher industrial power demand after the holiday season at an average of 52.39GW, from 50.82GW in August, also offered support.
Demand for German power from neighbouring countries has also increased, which supported higher fossil-fuel output. Net exports averaged 4.62GW this month, the highest since March.
Outlook
But persistent coal-to-gas fuel switching keeps these units at the margin of the merit order to run as back up generation when wind output is low.
Clean dark spreads for a 38pc efficient unit have averaged minus €2.77/MWh so far this month, which compares with an average of minus €3.67/MWh in August. These units remain well behind a 46pc-efficient gas-fired plant with average clean spark spreads of €2.97/MWh during the same period.
Only coal-fired units with an efficiency of 42pc or higher have been priced in on a base-load basis for October with spreads at an average of €1.24/MWh.
Wind power levels tend to be higher in October, averaging 16.07GW in the last three years, Fraunhofer ISE data show. Most recent forecasts suggested wind power levels at daily averages of 3.12-10.64GW until 1 October.
But German nuclear power plant capacity is expected to be full from 15 October when the 1.4GW Brokdorf unit returns to the grid, which could limit generation from coal-fired units.
Around 15-18GW of coal-fired capacity is expected to be available in the wholesale power market next month, EEX transparency data show.
