Germany’s delayed lignite review fuels debate over coal exit

BERLIN: Germany’s decision to postpone an interim assessment of its planned lignite phase-out in North Rhine-Westphalia has raised speculation that some coal-fired power plants could remain available for longer than originally scheduled to protect the country’s electricity supply.

The German government had been expected to publish an interim report by August 15 examining the consequences of the planned early shutdown of lignite-fired generation in the country’s largest state. However, the economy ministry has delayed the assessment while it awaits the outcome of tenders for new gas-fired power plants being conducted this year.

The development has attracted attention because the report is expected to play an important role in determining whether Germany can maintain electricity security while moving ahead with its ambitious coal-exit strategy.

Agreement with RWE

Under an agreement reached in 2022 between the German government and energy company RWE, lignite-fired electricity generation in North Rhine-Westphalia is scheduled to end by March 2030.

The timetable brought forward the shutdown of several lignite plants by eight years compared with Germany’s broader national coal phase-out target. Lignite, commonly known as brown coal, is among the most carbon-intensive fossil fuels and has long been a major target of Germany’s efforts to reduce greenhouse-gas emissions.

The government nevertheless retained the possibility of reassessing the situation by 2026. If the review finds that electricity supplies could be threatened, some RWE facilities could potentially remain available until 2033.

Delay raises market expectations

The postponement of the interim report has prompted speculation in energy markets that Berlin may eventually use the security provisions included in the agreement.

Market expectations have centred on around 3.6 gigawatts (GW) of RWE’s lignite-fired capacity potentially being placed into a so-called security standby arrangement. Under such a mechanism, plants could remain available to operate if the electricity system faces supply shortages, potentially extending their role through the end of 2033.

The government, however, has not announced any decision to extend the operating life of the plants.

RWE Chief Executive Markus Krebber said on Thursday that the company had not been informed of any change to the agreed 2030 shutdown date. He also indicated that the government had not approached RWE about extending the plants’ operations.

Gas power becomes increasingly important

The delay comes as Germany seeks to strengthen its electricity system with additional gas-fired generation.

Germany has approximately 266 GW of installed electricity-generation capacity, but a substantial portion comes from solar and wind power. While renewable energy has expanded rapidly, both technologies are weather-dependent and cannot independently guarantee continuous electricity production around the clock.

That has intensified concerns about how the country will maintain reliable power supplies as coal-fired generation is gradually removed from the system.

Gas-fired plants are increasingly being considered as a flexible source of electricity that can support the grid when renewable generation is insufficient. The government’s current tenders for new gas capacity are therefore closely linked to the broader debate over how quickly Germany can retire coal-fired plants without creating supply risks.

Security of supply remains a key concern

Germany’s energy transition has faced a difficult balancing act between climate objectives and electricity reliability. The country wants to expand renewable generation while reducing its reliance on fossil fuels, but the retirement of conventional power plants removes generation capacity that can be dispatched when required.

The issue became particularly sensitive following the country’s decision to phase out nuclear power, leaving policymakers with fewer sources of low-carbon, dispatchable electricity.

Supporters of a rapid coal exit argue that expanding renewable generation, electricity storage, grid infrastructure and flexible gas capacity can compensate for the closure of coal plants. Critics maintain that Germany could face periods of tight supply unless sufficient backup generation is available.

AfD presses for reversal

The issue has also become politically contentious. The far-right Alternative for Germany (AfD), currently the country’s largest opposition party and leading nationwide opinion polls, has strongly opposed Germany’s coal and nuclear phase-out policies.

The party has called for a reversal of the energy-exit strategy, arguing that the closure of conventional power stations could increase the risk of electricity shortages and potentially lead to blackouts.

The government, meanwhile, faces the challenge of ensuring that its climate commitments do not undermine electricity security.