German chemical industry relief as vital CHP support extended

The head of the union representing the German chemical industry (VCI) has welcomed the decision by the government to amend the country’s CHP (Combined Heat and Power) Act, KWK-Gesetz.

CHP, a VCI chairperson told COSPP, is ‘the most important energy production technology in the chemical industry’ and the decision of the Bundestag on Friday to extend support for industrial CHP plants, under the amendment of the act, has been greeted with relief.

The German government enacted new legislation to encourage the expansion of gas-fired CHP plants as part of measures designed to help the country meet its 2020 emissions targets. Under the amended act the country aimed to produce 110 TWh a year from the co-generation fleet by 2020, a 15 per cent rise from current levels, with new gas plants receiving subsidies, “specifically targeting a switch from coal”, according to the parliament’s economics committee. à‚ 

New coal-based CHP units will no longer qualify for subsidies under the amended law, with gas plants the beneficiaries of a doubling in annual support payments from EUR 750m to EUR 1.5bn.

The reform also extends the entire support scheme by two years to 2022, heeding industry concerns some projects under consideration faced abandonment due to long planning times.
Utz Tillmann
According to VCI director-general Utz Tillmann, the extension of the legislation to 2022 enhances planning and investment security for companies.

Tillmann also sees CHP as making an important contribution to the energy transition (Energiewende) in Germany saying, “An equal treatment of industrial and municipal plants could have further intensified the climate protection effect.”

The VCI director-general also highlighted the importance of exempting industrial self-generation in CHP plants from the EEG charge (EEG = German Renewable Energy Act). The European Commission wants this exemption to be reviewed by the end of 2017.

Tillmann said. “When that date was decided, the federal government underlined its intention to continue advocating a permanent status of the exemption. I assume that the German government will take a stance to this effect vis-àƒ -vis the Commission.”

Spokesperson for the VCI, Jurgen Udwari, told COSPP, “Combined heat and power is the most important energy production technology in the chemical industry. Our plants cover approximately 90% of our heat requirement and roughly one fourth of our electricity demand.

“We produce 16 TWh but, out of this total, we only use 12-13 TWh ourselves”. Due to high gas prices, CHP plants invariably work on the edge of economic efficiency. Without the possibility of future support, some companies are most likely to give up investments in maintaining and modernizing the plants,” he added.

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