The German Ministry for Economic Affairs, under the leadership of Minister Katherina Reiche (CDU), has reached a preliminary agreement with the European Commission on the framework for Germany’s power plant strategy. While hailed by the ministry as a crucial step towards securing Germany’s energy future, the plan faces final regulatory approval from the European Commission concerning state aid law, introducing a layer of potential complication and delay.
Reiche’s initial proposal to construct a substantial 20 gigawatt (GW) capacity of new natural gas power plants has been significantly moderated during negotiations with the EU. The revised strategy prioritizes an initial tender process this year for 12 GW of “dispatchable capacity”. These flexible power sources encompass a broad range of technologies – including gas-fired power plants, large-scale battery storage, biogas facilities, hydropower, controllable consumer loads (such as electric vehicle charging points throttling consumption) and even industrial sites capable of reducing energy draw in times of scarcity.
A key element of the framework involves a long-term operational criterion for 10 GW of the planned capacity. This requirement mandates that these plants demonstrate stable and continuous electricity generation over extended periods, strongly favoring gas-fired power plants currently. This represents a scaling back of plans previously championed by Reiche’s predecessor, Robert Habeck (Green Party), who had initially envisioned a build-out of 12.5 GW of new gas power plants. The agreement stipulates that these long-term capacity facilities must be operational by 2031 at the latest.
Further tenders for dispatchable capacity, potentially reaching a total of 12 GW, are slated for 2027 and 2029/2030, with a mandate for full availability by 2031. These subsequent tenders will be open to existing plants, raising questions regarding the long-term investment security for newly constructed facilities.
A commitment to future-proofing and decarbonization permeates the strategy. All power plants constructed under the framework must be “hydrogen-ready” and are required to be fully decarbonized by 2045. Furthermore, the ministry proposes incentivizing a potentially accelerated transition to hydrogen, with 2 GW of power plant capacity slated for conversion by 2040 and another 2 GW by 2043.
“The short-term tenders for twelve gigawatts of new, additional dispatchable capacity lay the groundwork for a secure power supply in Germany and, consequently, for the competitiveness of our industry” stated Minister Reiche. However, critics argue that the continued reliance on natural gas, even with a hydrogen transition in mind, represents a potential setback for Germany’s climate ambitions and creates dependencies on fluctuating global energy markets. The emphasis on dispatchable capacity, while intended to ensure stability, also raises concerns about whether the market mechanism is sufficiently robust to drive innovation beyond gas-fired generation and foster truly sustainable alternatives. The final approval from the EU Commission will undoubtedly scrutinize the strategy’s alignment with wider European climate targets and state aid regulations.