<article><p class="lead">Germany will require contracts for difference (CfDs) for the conversion of coal-to-biomass plants in order to make them profitable under current market conditions, a report by energy consultancy Enervis shows. </p><p>The conversion under current market conditions is unprofitable because fuel costs are not covered by the profits from the wholesale power market, Enervis said. </p><p>In order to make the conversion profitable, the consultancy suggested the introduction of CfDs, as they are commonly used in other European countries, such as the UK, Netherlands and Denmark. CfDs have the advantage of minimising profitability risks and increasing the probability of project implementation, the firm said. </p><p>Enervis estimates electricity production costs at €105-120/MWh for a 10-year funding period if a plant is commissioned in 2026. Annual funding for plant is estimated at €33-46/MWh, depending on several factors, such as the location and capacity of the plant, fixed costs and others. The average annual funding is estimated at €37/MWh. </p><p>In addition, the development of wholesale power prices is a factor in determining funding needs. Power prices will depend on the development of CO2 prices. Under this scenario, CO2 prices are estimated at €44/t CO2e in 2030. </p><p>Under Germany's lignite and hard-coal exit law, the country aims to phaseout all coal and lignite-fired plants by 2038 at the latest. The conversion from coal to biomass can contribute substantially to speeding up the reduction of Germany's CO2 emissions and to balancing systems, that would otherwise need to be balanced with the construction of new plants, Enervis said. </p><p class="bylines">By Felicia Grosse</p></article>
