Coal covers more than half of Germany's electricity demand

The share of coal in Germany's power generation mix has risen to 52 percent in the first-half of this year amid a drop in output from gas-fired power plants and wind turbines, research organization Fraunhofer Institute (ISE) said. Coal-fired plants stepped up electricity production by about 5 percent to 130.3 TWh in the first six months of 2013 as output from gas-fired plants fell 17 percent to 21.9 TWh, said ISE in reference to data from Germany's statistical office and the EEX transparency platform.

Wind power production dropped 10 percent to 22.4 TWh, while solar output was unchanged at 14.3 TWh. Hydro output rose 3 percent to 9.2 TWh, with nuclear output up 1.8 percent to 46 TWh.

The use of lignite for power generation is incentivized by lower carbon prices. Germany's lignite capacity stands at 20 GW, with about 3 GW of more efficient plants added since 2011 which run like nuclear as base load plants around the clock. German power producers plan to add 5.3 GW of new-build coal capacity by the end of this year, statistics from the federal grid agency (BNetzA) showed.

Even the most modern CCGT plants are now seriously under-utilized. The plants are, however, still needed for security of supply during winter months. The gap between the clean dark and clean spark spreads, indicating the profit margins for coal and gas plants, had widened to €23/MWh by the end of June, based on year-ahead contracts for power, coal, gas and carbon emissions, according to Platts data. Apart from natural gas, Germany uses domestic lignite coal and hard-coal, mainly imported, for power generation.