Germany can diversify its gas supply if liquified natural gas (LNG) is added to the system to replace Russian gas, unlocking a 20% coal reduction and net zero electricity by 2035, according to Wärtsilä’s new modelling released today.
The modelling outlines two pathways Germany can take to end Russian gas imports this year and still reach its renewable energy targets by 2035. Crucially, without LNG, Germany will be more reliant on coal, leading to an additional 30 million tonnes of CO2 produced between now and 2045.
Jan Andersson, General Manager, Wärtsilä Energy, said: “Germany is at the epicentre of a perfect storm. The federal government has made a bold commitment to stick to its climate targets, but now finds itself at a crossroads. Our modelling underlines the importance of moving away from coal and using LNG as a bridge. This will allow Germany to end Russian gas imports and keep its renewable ambitions alive. By relying on coal, Germany will not only prolong its own path to net zero, but it will also send an implicit message that other countries can do the same.”
Both pathways show that the German government’s goal of 100% renewable electricity by 2035 can be reached and will require a total of 780 TWh of renewable energy to be added to the power mix, requiring a 10% year-on-year increase in wind and solar energy. However, this challenge is made far more difficult by the presence of coal, which cannot provide flexible back-up power as more renewable energy capacity is added.
Flexible gas engines are needed in both scenarios to provide back-up capacity at times when the shine doesn’t shine, and the wind doesn’t blow. In the LNG scenario, Germany will have over 10 GW of flexible gas capacity, compared to just 2 GW if it relies on coal, seriously harming its attempts to scale up renewable energy this decade.
Germany also risks becoming a net importer of electricity from surrounding countries if it continues to rely on coal. If the coal phase-out is slowed, it risks importing 150 TWh of energy by 2035. Firm flexible capacity from LNG enables Germany to export 457 TWh of electricity between now and 2035 and can help to hedge against high electricity prices, especially during cold winter months when electricity demand is high across Europe.
Due to the ongoing energy crisis, concerns that Germany may restart its coal power plants have grown in recent months, potentially harming its 2030 coal phase-out commitment and disincentivising other countries to accelerate their own coal phase-outs. Wärtsilä’s modelling demonstrates that these fears may not be realised if Germany is able to switch to LNG this year.
If coal power continues to be a substantial part of Germany’s energy mix until 2030, the total carbon emissions would be 30 million tonnes higher by 2045. Moreover, relying on coal risks further investment in stranded assets as legacy power plants reach the end of their life or require maintenance. Although an LNG pathway is marginally (3%) more expensive than not using LNG, the valuable flexibility and emissions reductions achieved will help Germany reach its 1.5ºC goal and create a smoother transition to net zero. With hydrogen set to be introduced by 2028, future-proofed gas engines will create a seamless shift to sustainable fuels. Wärtsilä’s engines can operate using hydrogen/natural gas blends with up to 25% hydrogen, and the company is working towards an engine and power plant concept for pure hydrogen operations by 2025.
Relying on coal for longer also has ramifications for domestic heating. According to the modelling, district heating systems and combined heat and power plants (CHP) will rely on coal power for over 50% of generation until 2026, slowing the progress to electrification using heat pumps and efficient engine CHP plants that can transition to sustainable fuels such as hydrogen.
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Wärtsilä Energy in brief
Wärtsilä Energy leads the transition towards a 100% renewable energy future. We help our customers in decarbonisation by developing market-leading technologies. These cover future-fuel enabled balancing power plants, hybrid solutions, energy storage and optimisation technology, including the GEMS energy management platform. Wärtsilä Energy’s lifecycle services are designed to increase efficiency, promote reliability, and guarantee operational performance. Our track record comprises 76 GW of power plant capacity and 110 energy storage systems delivered to 180 countries around the world.
Wärtsilä in brief
Wärtsilä is a global leader in innovative technologies and lifecycle solutions for the marine and energy markets. We emphasise innovation in sustainable technology and services to help our customers continuously improve their environmental and economic performance. Our dedicated and passionate team of 17,000 professionals in more than 200 locations in 68 countries shape the decarbonisation transformation of our industries across the globe. In 2021, Wärtsilä’s net sales totalled EUR 4.8 billion. Wärtsilä is listed on Nasdaq Helsinki.
About the modelling
The PLEXOS modelling is based on techno-economic optimisation of Germany’s power system. The modelling compares two different scenarios where Russian gas is phased out, one where LNG is added to the capacity mix and one where coal is prolonged to meet capacity.