The coal phase-out in Germany and Central Western Europe under new framework conditions

Abstract

Emission reduction targets require a transformation of the European electricity system. In particular, emission-intensive conventional power plants have to be phased out. How far the transformation can succeed already by 2030 remains unclear and depends on multiple framework conditions. To shed light on this in some detail, we analyze the Market driven coal phase-out in Central Western Europe and the role of gas-fired power plants as well as electrolysis and battery capacity in the year 2030 in an electricity market model. Our model approach allows endogenous decisions on investment and decommissioning for fossil power plants, electrolysis capacity and batteries according to short-term market results with decisions on generation levels, short- and long-term storage operation and hydrogen production. We consider various scenarios with regard to CO${}_2$ prices and the expected increase of electricity demand in Europe with a focus on Germany, for which a regulatory forced coal phase-out as early as 2030 is also considered. The results illustrate how the expansion of renewable energy sources reduces the capacity of fossil power plants needed in 2030 and, depending on the assumptions regarding electricity demand and the emission price, investments in gas-fired power plants and battery capacity lead to additional decommissioning of coal-fired power plants. National plans for the phase-out of coal-fired power generation as early as 2030 in Germany lead to some cross-border effects in capacity, but production levels and market prices are not significantly affected.