Germany's dash for coal: Exploring drivers and factors

The German electricity sector has recently seen extensive planning and construction of new coal-fired power plants. Within a period of only a few years, new investments amounting to around 15% of the total sector capacity were brought on the way, and plans for a multitude of additional projects are pending. This 'dash for coal' in Germany has raised considerable public concern, especially as it risks to undermine recent political attempts to combat global warming. Yet, the question of why the dash for coal has emerged has not yet been addressed in a thorough analysis. This article attempts to close this research gap, while at the same time contributing as a case study to the general understanding of investment patterns in liberalized electricity markets. It finds that the main reasons for the dash have been (1) replacement requirements due to the nuclear phase out, (2) the onset of a new investment cycle in the power market, (3) favorable economic and technological prospects for coal compared with natural gas in the long run, (4) a status-quo bias of investors in regard to future renewable deployment, (5) explicit political support for coal, and (6) the ineffectiveness of public protest in hampering new projects. (C) 2010 Elsevier Ltd. All rights reserved.