Tag: LEAG

  • German Lignite Operator LEAG Pushes to Suspend Coal Phase-Out and Exit EU Carbon Market as Iran War Reshapes Energy Calculus

    German Lignite Operator LEAG Pushes to Suspend Coal Phase-Out and Exit EU Carbon Market as Iran War Reshapes Energy Calculus

    Eastern Germany’s largest lignite plant operator LEAG is lobbying state governments in Brandenburg and Saxony to keep domestic coal production running beyond planned phase-out timelines, arguing that the energy crisis triggered by the Iran war has fundamentally altered the conditions under which Germany’s coal exit was agreed.

    According to an internal company presentation reported by business weekly WirtschaftsWoche, LEAG is positioning lignite as a cheap, domestically available alternative to fossil fuel imports disrupted by damage to Persian Gulf energy infrastructure and trade routes. The document, prepared as a briefing ahead of talks with eastern German coal state governments, describes lignite power production as a potentially cost-competitive energy source capable of bolstering Germany’s energy security — but one rendered artificially uncompetitive solely by carbon prices under the EU’s Emissions Trading System.

    LEAG’s proposals include excluding lignite-fired power plants from the ETS for a predetermined period, placing selected plants on security standby while mining continues, and introducing an industry power price that could be set at approximately half the market rate if the state absorbs carbon costs. The company did not deny the reports but described its discussions with state governments as routine engagement ahead of a planned summer monitoring report on Germany’s coal phase-out. It added that the Iran conflict had created “changed framework conditions” that make fresh talks “absolutely necessary.”

    The push finds some political sympathy. Chancellor Friedrich Merz said after the outbreak of the Iran war that Germany may need to delay the closure of individual coal plants in the event of supply shortages. The state governments in Brandenburg and Saxony acknowledged they hold regular talks with LEAG, which is a major employer in their coal mining regions, without confirming receipt of the specific proposals.

    The initiative sits awkwardly against the financial commitments already made around the phase-out. LEAG is set to receive up to 1.75 billion euros under Germany’s coal phase-out law to transition its business toward climate-neutral energy production, while the states themselves are in line for billions of euros in structural adjustment funding ahead of the 2038 phase-out deadline. Removing lignite from the ETS would work directly against one of the trading system’s primary objectives — pushing polluting and inefficient plants out of the market — while market dynamics alone could make coal-fired power generation economically unviable well before 2038, researchers have noted.

    In western Germany, RWE has agreed to end coal-fired power production by 2030, conditional on sufficient backup capacity being installed. The federal economy ministry confirmed on Monday that it had contributed more than a third of 240 million euros in transformation investments in North Rhine-Westphalia, covering battery production and recycling facilities among other projects.

    LEAG’s owner, Czech investor Daniel Kretinsky, has previously criticised the EU’s carbon pricing scheme. The company said that if none of its proposals are accepted, it would consider closing its least efficient plants ahead of schedule.

  • EU Approves €1.75 Billion in German State Aid for LEAG’s Early Coal Exit

    EU Approves €1.75 Billion in German State Aid for LEAG’s Early Coal Exit

    The European Commission has signed off on Germany’s plan to provide up to €1.75 billion in compensation to energy company LEAG for the early shutdown of its lignite-fired power plants, a major step in the country’s coal phase-out strategy. The funds will cover lost profits as well as social costs, including measures to support workers transitioning into new employment.

    Germany’s coal exit aims to eliminate coal power generation by 2038 at the latest. While western Germany is on track to complete its phase-out by 2030—significantly earlier than originally planned—progress in eastern Germany, where LEAG operates its plants and open-cast mines, is moving more slowly. LEAG’s facilities are scheduled to close in stages between 2028 and 2038.

    Because national subsidy schemes can distort competition, EU approval is required for state aid. The Commission ruled that the compensation meets EU requirements, stating it is necessary to support Germany’s climate goals, appropriate in design, and proportionate—limited strictly to what is needed without leading to overcompensation. Brussels previously approved €2.6 billion in payments to western German lignite operator RWE under similar circumstances.

    German economy and energy minister Katherina Reiche welcomed the decision, calling the transformation of coal-dependent regions a “generational task.” The EU’s green light, she said, provides long-term planning certainty and opens the way to rebuild regional economies around new technologies, sustainable land restoration, and modern employment opportunities. Compensation to LEAG will be disbursed in several instalments over the coming years.

    LEAG is also accelerating its shift toward clean energy. On the same day the EU approved the aid package, LEAG Clean Power — a subsidiary of the group — announced plans for a 1.6 gigawatt-hour battery storage facility on the site of a former coal plant, underscoring the company’s transition strategy.

  • Germany Expects EU Approval for €1.75 Billion Coal Exit Compensation to LEAG

    Germany Expects EU Approval for €1.75 Billion Coal Exit Compensation to LEAG

    The German government expects the European Commission to give the green light “within weeks” for €1.75 billion in compensation payments to LEAG, the lignite mining and power company operating in eastern Germany. The payments form part of Germany’s broader coal phase-out plan, which aims to end coal-fired power generation by 2038 at the latest, according to the Ministry for Economic Affairs and Climate Action (BMWK).

    The legislative changes needed to unlock the funds were recently approved by Germany’s coalition government. The compensation package, first agreed in 2020, had faced delays in Brussels due to differences over the timeline for the eastern German coal exit, which lags behind the 2030 phase-out already underway in western Germany.

    Under the revised plan, LEAG, owned by Czech energy group EPH, will receive €377 million to reimburse earlier payments into funds for recultivation of mining areas. From 2025 to 2029, the company is set to receive €91.5 million per year in additional payments from the federal budget to support environmental restoration and social transition measures.

    The compensation is part of Germany’s Coal Exit Law, which seeks to cushion the social and economic consequences of the energy transition for affected regions and workers. The government has said these payments will ensure “a fair and orderly exit from lignite power.”

    LEAG may also qualify for further compensation for so-called social costs — losses related to early plant closures or infrastructure decommissioning. These payments could extend until 2042, depending on determinations by the Federal Network Agency (BNetzA) regarding lost profits or system reliability needs.

    Critics have questioned the scale of the compensation, arguing that it may cover profits companies would not have earned under normal market conditions. Environmental groups have also expressed frustration that the eastern coal phase-out remains slower than in western Germany.

    LEAG, which operates in Lusatia, continues to be a key regional employer and economic anchor in eastern Germany, where the coal exit is closely linked to the rollout of new gas-fired capacity to maintain energy security. Germany plans to tender up to 20 gigawatts of gas plants to support grid stability — a process delayed nearly two years and still pending EU approval.

  • Vestas and LEAG Collaborate on 105 MW Wind Energy Project in Germany

    Vestas and LEAG Collaborate on 105 MW Wind Energy Project in Germany

    In a significant step towards Germany’s renewable energy goals, Vestas and LEAG have announced a 105 MW order for the wind energy project “Forst-Briesnig II” in the Lausitz region. The project will feature 17 V162-6.2 MW wind turbines from Vestas, encompassing the supply, delivery, and commissioning of the turbines. Upon completion, Vestas will maintain the turbines under a 20-year Active Output Management 5000 (AOM 5000) service agreement, ensuring optimal performance and longevity.

    Located on a former brown coal mining site, this project marks a pivotal moment for LEAG, representing their first foray into wind energy through their subsidiary, LEAG Renewables GmbH. This initiative is part of a broader transformation of the Lausitz region into a renewable energy hub under the GigawattFactory project. “Securing the second-largest building permit for an onshore wind farm in Germany and finalizing this contract are key milestones for the successful realization of the Forst-Briesnig II wind farm,” said Dominique Guillou, CEO of LEAG Renewables GmbH.

    Jens Kück, Senior Vice President Sales Onshore of Vestas Northern and Central Europe, highlighted the project’s significance, describing it as a “lighthouse onshore wind project” that exemplifies the transition from fossil fuels to renewables. Thorsten Kramer, CEO of LEAG, emphasized the strategic importance of partnering with Vestas to advance the GigawattFactory, aiming to establish one of Germany’s largest onshore renewable energy networks.

    Tomáš David, senior executive at EP Corporate Group, the controlling shareholder of LEAG, remarked on the investment’s transformative nature, positioning it as a crucial component of their strategy to shift from conventional to sustainable power generation. Turbine delivery is expected to begin in the fourth quarter of 2025, with commissioning slated for completion by the third quarter of 2026.

  • Leag Secures €1.75 Billion for Early Coal Phase-Out in Eastern Germany

    Leag Secures €1.75 Billion for Early Coal Phase-Out in Eastern Germany

    Eastern German lignite mining and power plant company Leag has received approval for up to 1.75 billion euros in state support to facilitate the “early” phase-out of coal-fired power production in eastern Germany. This follows an agreement between the European Commission and the German government, confirming that the compensation payment aligns with EU subsidy regulations. The funds will help Leag transition from fossil fuels and create new jobs in the Lusatia region ahead of the coal exit’s final deadline in 2038.

    The Commission’s decision came after a review that started in 2021, prompted by local policymakers and the German government. “This is an important step for the people in this region,” said Germany’s economy minister Robert Habeck. The compensation will fund social support programs for coal workers and the restoration of former mining areas.

    Habeck emphasized that the payments to Leag are part of broader government measures to support the region’s shift to climate-neutral energy generation and industrial production. With targeted support for innovative transformation technologies, the government aims to foster a thriving economy in Lusatia. Leag CEO Thorsten Kramer welcomed the agreement, calling it “an essential element for our further successful transformation to being a green powerhouse.”

    The deal with the Commission and the initial plan from Germany’s previous government includes a gradual release of the funds. The estimated cost of phasing out coal is around 1.2 billion euros, which Leag will receive as a minimum. Additional funds of up to 550 million euros depend on the potential profitability of closed coal plants and the foregone profits due to the phase-out. The economy ministry stated that this process ensures Leag is not “overcompensated” for its role in the coal phase-out.

    Assessing Leag’s compensation was more complex than for its western counterpart RWE, which agreed to close its plants well before the 2038 deadline. The Commission will continue to review the scheme and release a formal decision in the coming months.

    Christian Ehler, from the conservative Christian Democrats (CDU) representing the region in the European Parliament, said the agreement brings clarity after three years of negotiations. “Leag can continue on its path of renewable power, hydrogen-ready power plants, and energy storage,” Ehler said. He added that the decision shows “the EU isn’t abandoning East Germany,” marking a milestone in Lusatia’s ambition to become Europe’s first Net Zero Valley.

    The agreement did not specify an end date for coal before 2038. However, Bernhard Herrmann, a member of the government committee for climate and energy from the Green Party, noted that the expansion of renewables will naturally phase out coal plants as they become less profitable. He argued that the deal would reduce taxpayers’ costs for the phase-out, with coal companies likely to take their plants offline voluntarily due to decreasing profitability.

  • EU Requests Profit-Based Backstop for Germany’s €1.75 Billion Coal Shutdown Payout

    EU Requests Profit-Based Backstop for Germany’s €1.75 Billion Coal Shutdown Payout

    The EU is urging Germany to include a profit-based backstop in its €1.75 billion ($1.9017 billion) payout for the early shutdown of the operations of its second-largest coal miner. A state payment of up to €1.2 billion to an entity of Czech billionaire Daniel Kretinsky’s EPH Group AG has been preliminarily approved by the European Commission, according to Germany’s economy ministry. The remainder of the payout will depend on the future profitability of the assets.

    The approved sum, as reported by Bloomberg on May 31, is intended to cover costs for mine rehabilitations, closures, and the impact on jobs. To prevent overcompensation, Lausitz Energie Bergbau AG (LEAG) will be required to provide proof of future costs and will be compensated from the remaining sum of €550 million, according to a letter from the EU’s Competition Commissioner Margrethe Vestager.

    Germany is working to accelerate the phaseout of coal in its power generation mix after failing to meet its emissions reduction targets. In 2020, the government agreed to pay billions of euros in compensation to LEAG and RWE AG to shut down coal-fired power plants by 2038. Now, to cut carbon emissions faster, the state is negotiating to advance the coal exit by eight years.

    In 2022, RWE agreed to a 2030 phaseout and will receive €2.6 billion in state payments. LEAG is still negotiating, aiming to continue burning coal beyond the end of the decade. Fossil fuel plants have to pay for carbon permits, and rising costs could squeeze coal profits. The backstop measure is designed to address this—if LEAG shuts down plants early due to unprofitability, the subsidy would be reduced. LEAG maintains that coal will remain profitable until 2038, the current legal exit date.

    “This is a bet on the future,” economy minister Robert Habeck said at a press conference in Berlin, noting the difficulty in calculating foregone profits for 2038. The European Commission still needs to give its final decision on the payment.

  • LEAG Plans Construction of Hydrogen-Ready Gas Power Plant in Eastern Germany

    LEAG Plans Construction of Hydrogen-Ready Gas Power Plant in Eastern Germany

    LEAG, the largest lignite mine operator in Eastern Germany, has announced plans to construct one of Germany’s inaugural hydrogen-ready gas power plants. Boasting a capacity of 870 megawatts (MW), the proposed gas turbine power plant could see construction commencing as early as 2025, pending specific tender criteria outlined in the government’s power plant strategy and EU agreement on state support.

    The move towards hydrogen-ready gas plants is pivotal in ensuring electricity supply security amid the escalating share of intermittent renewable energy sources and the looming phase-out of coal by 2038. LEAG envisions a six-year construction timeline for the gas power plant, situated in the Schwarze Pumpe industrial park, with an anticipated grid connection by 2030. Leveraging existing access to the natural gas grid, the plant is slated to integrate into Germany’s future hydrogen core network.

    LEAG’s initiative aligns with its broader strategy of transitioning towards renewable energies in the Lusatia coal-mining region. The recent approval of Germany’s power plant strategy aims to establish an investment-friendly framework for new hydrogen-ready gas-fired power plants. Despite the imperative role of such plants in intermittent operation scenarios, their construction faces financial challenges due to high fuel costs, necessitating governmental support.

    While LEAG’s proposal signals progress, a recent report highlights Germany’s sluggish pace in implementing hydrogen plans, with current production facilities totaling only 0.3 gigawatts (GW) against a 2030 target of 10 GW. Bridging this gap remains critical for Germany’s energy transition ambitions.