(Bloomberg) — EON SE, Germany’s biggest utility, said it
needs to receive more compensation to keep open two unprofitable
gas-fired plants used to guarantee electricity supply in the
country.

“If a power plant is needed for system stability, the
cost-covering operation needs to be ensured,” Carsten Thomsen-Bendixen, a spokesman at Dusseldorf, Germany-based EON, said by
phone on Friday. That isn’t possible under current conditions
and the operation of Irsching 4 and 5 stations in Bavaria is
“jeopardized” when an existing supply deal expires next March,
he said.

Germany is paying some plants to guarantee supply as the
country develops more renewable energy. Grid operator TenneT TSO
GmbH pays a share of the fixed costs at Irsching 4 and 5 as part
of a 2013 deal under which EON agreed to make the facilities
available to secure grid stability for three years.

The costs of capital and amortization need to be considered
as part of a compromise to keep the plants running, said Josef
Hasler, chief executive officer of Nuremberg-based N-Ergie AG,
which owns about 25 percent of the 845-megawatt Irsching 5.

Gas-fed plants are struggling to compete with renewables
and coal-fired facilities in Germany. The difference between the
cost of the fuel and the price paid for the power generated, the
so-called spark spread, for the month ahead was minus 14.89
euros a megawatt-hour today.

Decision Required

A possible decision to shut Irsching has to be made this
month as 12 months’ notice is required. EON and other owners
will file to close the plant, ARD reported earlier on Friday.
The 550-megawatt Irsching 4, wholly owned by EON, started
operating in 2011 while Irsching 5 opened the previous year.

That puts pressure on Bavaria’s state government, which has
called for Irsching to continue operating. The German government
is considering splitting the country’s electricity market into
two zones, Spiegel reported yesterday, as Bavaria blocks links
to transport renewable power from northern Germany. Splitting
the market would probably increase prices in the southern state.

Mainova AG in Frankfurt holds about 16 percent of Irsching
5. HSE AG, a Darmstadt, Germany-based power supplier, owns about
9 percent.

To contact the reporter on this story:
Tino Andresen in Dusseldorf at
tandresen1@bloomberg.net

To contact the editors responsible for this story:
Will Kennedy at
wkennedy3@bloomberg.net
Dylan Griffiths, Ana Monteiro