Germany to Subsidize 10 GW of New Natural Gas Power Plant Capacity

Germany will tender 10 gigawatts (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 plan for Germany’s power plants is in its early stages of development and today the Economy Ministry said that German Chancellor Olaf Scholz, Economy Minister Robert Habeck, and Finance Minister Christian Lindner had agreed a program with which the federal government will fund the new gas plants with money from the Climate and Transition Fund.

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 said, outlining the strategy.

Germany’s power plant strategy was delayed for several months after a budget crisis at the end of last year, with the funds for transition strained by a recent ruling of the Federal Constitutional Court. The top court ruled in November 2023 that the government’s plans to transfer $65 billion (60 billion euros) from unused emergency COVID funding to Germany’s new Energy and Climate Fund is unconstitutional and the climate fund should be reduced by that amount.

Now Germany has agreed that 10 GW of new gas power capacity would be put up for tenders, the economy ministry said today, without giving a timeline. The plans for the plants to be converted to hydrogen should be completed by 2032, the ministry added.

The federal government of Germany also plans to subsidize hydrogen power plants with a capacity of up to 500 megawatts (MW) for energy research purposes.

In the draft power plant strategy, the German government also pledged to reduce “as much as possible” all regulatory hurdles to clean energy. 

Germany installed a record-high power capacity from solar and wind in 2023, but only solar additions met government targets, while wind power installations fell short of goals.

By Tsvetana Paraskova for Oilprice.com

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