London (Platts)--3Aug2011/1105 am EDT/1505 GMT

Profit margins for using coal-fired power plants to generate electricity for delivery in Germany next year have risen to their highest in over a year as emissions prices fell to their lowest in over two years, while German year-ahead power and European year-ahead coal prices continue to trade well above pre-Fukushima levels, traders said.

Platts data Wednesday showed the German year-ahead clean dark spread for coal-fired plants at Eur9.32/MWh compared with just Eur6.58/MWh a year earlier.

European carbon allowances were trading below Eur12/mt for the December 2012 contract, its lowest level in over two years.

By contrast, German baseload power for delivery 2012 is still trading more than 15% above its early March level, before the nuclear emergency at Japan's Fukushima reactor prompted the German government to reverse its nuclear extension plans and halt eight older reactors permanently removing almost a third of nuclear capacity from the market.

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The contract was heard trading at Eur56.95/MWh by 12:00 London time.

Year-ahead coal into Europe was trading Wednesday at around $128/mt, more than 25% higher year-on-year.

The clean dark spread is the theoretical gross income made by 35%-efficient coal-fired power plant after accounting for the cost of coal and CO2.

By contrast, the German year-ahead clean spark spread for gas-fired power plants remained below zero, but rose to minus Eur1.48/MWh, its highest in over a month as carbon emissions plunged, while power and gas prices remained more stable.

The clean spark spread is a measure of profitability for gas-generated electricity, the theoretical gross income made by a 50%-efficient gas-fired power plant after accounting for the cost of gas and CO2.

Utilities that can switch between gas and coal would earn Eur10.80/MWh more burning coal than gas in 2012, the largest premium between the two major power feedstock fuels so far this year.

Coal-fired power accounted for 18% of Germany's demand last year, while gas contributed 14%, according to utilities' lobby group BDEW. Nuclear and lignite, which are mainly used for baseload power, contributed most with 23% each.

--Andreas Franke, andreas_franke@platts.com