Document summary
With clean spreads at 3-year lows and full EUA auctioning from 2013, Deutsche Bank considers that while Germany’s lignite generators will continue to make healthy margins and nuclear plant will receive average lifetime extensions of 12 years, many older coal and gas-fired plants will not be able to cover their fixed costs after 2012 and will need to consider higher closure levels over 2011-14. An extra 4-5GW of closures would bring de-rated capacity margins down below 10% by winter 2014/15 and below 15% already by winter 2013/14, bringing prices/spreads back towards sustainable levels for remaining coal and gas plants by 2014/15.