Replacing gas in the German power sector

The invasion of the Ukraine by Russia has led to substantial economic sanctions. In this context, replacement of Russian gas is discussed. We analyze in how far activation of coal and nuclear capacities can replace gas in the power sector. We assess relevant constraints and find that the potential of such measures is limited.

Natural gas

In the context of the current war in the Ukraine, Germany is looking for options to replace Russian gas by other sources and means. As gas is also widely used in the power sector, one natural question is to what extent the use of gas in the power sector can be reduced. Using decommissioned or backup coal-fired plants and even to extend the lifetime of the last remaining nuclear power stations are discussed. 

To indicate the order of magnitude, Germany generated a bit under 100 TWh of power by means of natural gas in 2020 (a share of ca. 15% of total power generation). This equates to roughly 200 TWh or 20 bcm of natural gas input. Obviously, reducing this demand for gas would make more gas available for industry and heating, where alternatives may be more limited.    

Increasing the output from coal-fired power plants and prolonging nuclear generation can in fact reduce gas use in the power sector to some extent. In a model-based analysis, we investigated these aspects in more detail.  

First, the high gas prices we observe today would already decrease gas-fired generation to around 60 TWh in 2023 or 12 bcm of natural gas input, given that coal prices are kept constant. This is purely market effects and does not require extra coal or nuclear capacity.  

If grid-reserve coal and lignite capacities are activated in addition (around 5 GW in total) and nuclear generation is extended beyond 2022, this volume can be further reduced to a level of ca. 55 TWh gas-fired generation, which equates to around 110 TWh or 11 bcm of natural gas input. So a further 1 bcm may be saved by activation of grid reserves and nuclear extension. This may be less than one would hope for.  

There are three reasons why the displacement potential is limited: 

  •  Heat obligations set limits.Many of the gas-fired units in Germany provide both heat and power. The heat obligation puts limits to how much gas can be saved. Some of the natural gas may be replaced by light fuel oils or other options, but the heat obligation sets real limits that must be considered.  
  • Gas satisfies peak demand. Even with more coal and nuclear generation, natural gas will probably still be needed in winter on cold days with little wind. Currently, there is around 28 GW of gas-fired capacity installed in Germany. It is this firm capacity that would need to be replaced to ensure security of supply and avoid demand curtailment. The current installed capacity in nuclear power and coal grid-reserves amount to around 9 GW, so additional measures would be needed, such as postponing the decommissioning of coal-fired plants in the near future or reactivating recently decommissioned coal-fired plants. Such postponement could then further reduce the use of gas and add security of supply. In this context, the value of the additional coal or nuclear capacity is then more visible from a security of supply perspective, and less from a volume perspective.  
  • Gas displacement partly outside of Germany. Some of the displacement happens outside of Germany. Part of the nuclear and coal would also replace, for example, Dutch gas-fired generation. This would of course also ease the European gas situation but would not necessarily show on the German balance sheet.  

Coal and nuclear do contribute to make Germany less dependent on Russian gas. One should however be aware of the limiting factors to how fast large volumes can be replaced on short notice.  

 We are following the developments closely and will provide regular updates on this issue.  

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