Germany will begin lining up investors for its massive expansion of gas-fired power plants by early next year, marking a first step in its controversial strategy to ensure the nation’s electricity supplies.
Author of the article:
Bloomberg News
Petra Sorge
Published Jul 05, 2024 • 1 minute read
(Bloomberg) — Germany will begin lining up investors for its massive expansion of gas-fired power plants by early next year, marking a first step in its controversial strategy to ensure the nation’s electricity supplies.
By early 2025, five gigawatt of new plant capacity — which should later be converted to run on hydrogen — will be auctioned, the economy ministry said in a paper published Friday after weeks of protracted budget talks came to a conclusion. It added that another five gigawatt will be tendered as part of a new capacity mechanism, which is expected to be ready as of 2028.
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Germany is rapidly expanding its renewable energy sources, but exited nuclear energy last year and is looking to phase out coal. The government wants to subsidize the expansion of gas-fired power plants in order to underpin the grid when wind and solar supply ebb.
The idea is to gradually convert the gas plants to run on even cleaner hydrogen, but the high cost of such a move will require billions of euros in subsidies, which must be approved by the European Union. Germany’s economy ministry said the European Commission has given the plan a first green light, but a final state aid decision is still pending.
During the tenders, awards will go to the bidders requesting the lowest subsidies. The government will also provide auctions for two gigawatts of capacity from existing gas plants to be prepared for hydrogen conversion.
Large energy companies have already expressed interest in constructing such plants, including RWE AG, Uniper SE, EnBW Energie Baden-Württemberg and Lausitz Energie Kraftwerke AG.
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