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EU To Endorse German Plan to Subsidize 10 GW New Gas Power Capacity

EU competition regulators have given an informal approval to a German plan to offer state support to new natural gas-fired power capacity of 10 gigawatts (GW) that would help stabilize the grid as Europe’s biggest economy is boosting renewables, government and industry sources with knowledge of the talks told Reuters on Friday.

Earlier this year, the German government said that it would tender 10 GW of new natural gas-fired capacity from power plants that could be converted to hydrogen in the 2030s, as part of plans to ensure stable electricity supply as wind and solar power generation and installations grow.   

The Economy Ministry said in February that German Chancellor Olaf Scholz, Economy Minister Robert Habeck, and Finance Minister Christian Lindner had agreed on a program with which the federal government would fund the new gas plants with money from the Climate and Transition Fund.

The German plan has now won informal approval from the EU’s competition authorities, with an official approval from the EU under the state aid rules expected to be finalized in the coming weeks, according to Reuters’ sources.

Germany, which last year closed all its remaining nuclear power plants, is now seeking to balance the generation and transmission systems with new gas power plants, which, however, need to be ready to be converted to hydrogen at some point between 2035 and 2040, the economy ministry has said. 

Germany’s energy policy of the past two years has deviated from that of many developed economies. Europe’s top economy has a goal to be carbon neutral by 2045 and boost the share of renewable energy in its power generation to 80% by 2030, up from around 50% now.

While other developed economies – even Japan – are betting big on nuclear power again to boost zero-emission electricity and reduce reliance on fossil fuel imports, Germany last year closed all its remaining nuclear power plants.

By Charles Kennedy for Oilprice.com

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