Federal government agrees on power plant strategy

It was a long struggle in the traffic light coalition, now there is a plan: The federal government has agreed on a strategy for building new hydrogen-capable gas power plants in Germany.

The federal government has agreed on a compromise in the struggle to build new power plants. Federal Chancellor Olaf Scholz, Economics Minister Robert Habeck and Finance Minister Christian Lindner have “agreed on the essential elements of a power plant strategy as well as specifications for further projects,” the federal government announced.

Accordingly, the strategy is intended to create the framework for investments in modern, highly flexible and climate-friendly power plants that will be able to be operated with hydrogen in the future, it said.

In total, the construction of up to ten gigawatts of gas power plant capacity should initially be put out to tender. In 2032 it will be determined when the systems will be completely converted to hydrogen between 2035 and 2038. Planning and approval of the systems should be accelerated and the projects should be coordinated with the EU Commission. The funding is to be financed from the Climate and Transformation Fund, a special federal fund. According to coalition circles, the costs are around 16 billion euros for the next 20 years.

Strategy is still being discussed with Brussels

According to the communication, it was agreed that concepts for a so-called capacity mechanism should be developed. A political agreement on this should be reached within the federal government by summer 2024 at the latest. In a few years, operators could be rewarded for maintaining power plant capacity using such a mechanism. It was also said that the planning and approval procedures for the power plants included in the power plant strategy should be substantially accelerated. The agreement reached on the power plant strategy will be discussed with the EU Commission in Brussels.

Energy industry welcomes agreement

Initial reactions from representatives of the energy industry were positive. “The Gordian knot” has now been cut, said the head of the electricity network operator 50Hertz, Stefan Kapferer. This is good news for the energy transition and for a reliable power supply.

Now the question arises as to where the power plants should be built, Kapferer continued. The regionalization of the power plants is an important contribution to getting the system costs of electricity prices under control. This is the only way to save costs that arise from network expansion and interventions in the generation output of electricity producers.

The energy company Uniper was confident that it would be able to build some of the new capacities for Germany. “As soon as we have been able to check the details, we will decide whether and with what investments we will participate,” said Uniper boss Michael Lewis.

Months of struggle

The federal government had struggled for several months to reach an agreement. At its core, the planned strategy is about building gas power plants that are intended to compensate for the growing but fluctuating feed-in of wind and solar power. The systems are to be gradually converted to climate-friendly hydrogen. Whether Germany can shut down the last coal-fired power plant by 2030, as demanded by the Greens in particular, also depends on the implementation of the strategy.