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Merkel's Government Looks Abroad to Keep Germany's Lights On

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(Bloomberg) -- Germany will rely heavily on neighboring nations in Europe to avert blackouts as it weans itself off coal over the next two decades, a senior government official said.

Europe’s biggest consumer of electricity is working to shut power plants fueled by both coal and nuclear energy that account for half of the nation’s generation capacity. Thomas Bareiss, a deputy economy and energy minister, acknowledged that retiring all those plants poses a challenge that may leave Germany reliant on imported electricity.

“It means thinking ahead and acting in concert in an already active cross-border market,” Bareiss said in an interview in Essen.

The remarks indicate the scale of the challenge Chancellor Angela Merkel’s government has embraced in vowing to close all its 120-some coal plants by 2038, including “front-loading” many of the closures early in the next decade. Alarmed by the meltdown of the Fukushima power station in Japan in 2011, Germany also is working to eliminate nuclear energy by 2022.

Bareiss said Germany is planning discussions in Berlin with representatives from EU nations about how it can secure power capacity during the phaseout. For years, Germany has been working to replace those traditional forms of power generation that work round the clock with wind, solar and natural gas plants, whose output is more variable.

The move to shut hard coal and lignite plants, which together provided about 38 percent of all power in Germany last year, needs “close coordination all the way with neighbors,” said Bareiss, a member of Merkel’s Christian Democrat party.

Germany has borders with nine nations, the most of any state in the European Union. For the moment, blackouts are “exceedingly rare and of short duration,” said a Bnetza power regulator spokesman on Thursday. Last year’s average outage was about 15 minutes, he said.

Power regulator and transmission federations ACER and ENTSO-E as well as the Central Western Europe power group regularly confer on security as the trade bloc shifts to a single market. Nevertheless, Belgium’s concern over potential outages last year after a number of accident-prone reactors were taken offline shows the fragility of cross-border arrangements.

Click to read: Can the Power System at the Heart of Europe Really Fail?

As winter neared, Germany agreed to free up 20 percent of its interconnector capacity and critical high-voltage cables to supply Belgium via the Netherlands, if needed. Luckily, the scare fizzled, but it provided a lesson.

Belgium’s winter outage woes weren’t a one-off but a warning of a systemic risk in Europe as round-the-clock power from conventional sources winds down, said Dominique Ristori, a director general of the European Commission in a speech in Berlin in October. Ristori said as many as seven states teeter on the brink of regular blackouts.

Germany may start closing coal plants next year and retire 12.6 gigawatts of capacity by 2022. That’s on top of about 9 gigawatts of nuclear energy that Merkel ordered to be closed by the same year. That probably means some 22 gigawatts of capacity, or about 11 percent of the nation’s total, will be switched off in a few years.

For now, steady wind and solar expansion coupled with extensive conventional power is creating a surplus of electricity that’s spilling across Germany’s borders. The overrun led to diplomatic spats in 2017 with Austria, the Czech Republic and Poland, where domestic power prices were less competitive.

“What’s sure, is Germany can’t wholly rely on its partners in the future,” said Stefan Kapferer, the managing director of the BDEW utilities federation, in a note to Bloomberg. “They’re cutting coal as well.”

Coal power capacity in the EU-28 will fall to about 105 gigawatts from 150 gigawatts between 2016 and 2025, the BDEW industry group estimates. That will require shoring up a gap in the reliable “baseload” power before Merkel’s coal exit panel proposed closures by 2022. German coal plants had a combined capacity of 43 gigawatts last year.

“Power overcapacity we’re seeing now in Germany will melt away,” Kapferer said.

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net;William Wilkes in Frankfurt at wwilkes1@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Andrew Reierson

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