German tender scheme for new gas power plants could be delayed

Oct 30, 2023

The government's plan to introduce a tender system to ensure new gas-fired power plants are built – which the government considers necessary as a supplement to renewables to secure the electricity supply as Germany phases out coal – could be delayed, reports Jakob Schlandt in Tagesspiegel Background. The economy ministry told the news service that talks with the European Commission were ongoing to ensure that the announced "power plant strategy" would be in line with state aid rules. The ministry still assumes that "the first tenders would be launched by the end of the year", but this is "dependent on the national legislative process and subsequent approval process under state aid law," said a ministry spokesperson. The strategy is a key element for Germany's planned earlier coal exit. Once the government cabinet decides on the strategy and legislative proposals by the economy ministry, these will then have to be debated and decided in parliament.

The government aims to have about 25 gigawatt of controllable power production capacity built to ensure supply security as Germany moves away from coal. Tagesspiegel reports that it is not yet clear what types of power plants are set to be built, but much of the capacity is set to come from hydrogen-ready gas-fired power plants. The subsidy would be based on the actual output (cents per kilowatt hour) and not on the capacity provided, writes Schlandt. "It is possible that the fact that there is a better chance of approval by the European Commission plays a role here," he writes. Schlandt adds that it is also unclear what the conditions for calling a plant "hydrogen-ready" will be. Sascha Müller-Kraenner, managing director of NGO Environmental Action Germany (DUH) said: "Only a gas-fired power plant that is technically capable of being upgraded to 100 percent green hydrogen may be called 'H2-ready'. Gas-fired power plants must therefore submit a detailed roadmap showing the current H2 readiness level as well as the measures and costs necessary to fully upgrade to 100 percent green hydrogen."

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