January 2025

260109

ENERGY CHRONICLE

EU Commission approves key points of planned “power plant strategy”

The German Federal Ministry for Economic Affairs and Energy has reached an agreement in principle with the European Commission on the key points of its planned “power plant strategy.” As announced on January 15, the agreement also includes “a comprehensive overall strategy for the technology-neutral expansion of controllable capacity and thus for securing the overall supply of electricity in Germany.” This includes “the introduction of a comprehensive capacity market in the course of 2027, which from 2032 onwards will ensure that there is sufficient controllable capacity in the system.” However, the details of this are still under discussion.

Of the 12 GW of capacity put out to tender, 10 GW should be able to generate electricity in the long term.

In a first step, 12 gigawatts (GW) of new, controllable capacity are to be put out to tender this year. For 10 GW of these tenders, for reasons of security of supply, it is envisaged that the capacities awarded “will be able to generate electricity over a longer period of time”. These long-term capacities include, for example – “but not exclusively” – modern and highly efficient gas-fired power plants that will commence operation in 2031 at the latest. Further tenders for controllable capacities are to follow in 2027 and 2029/2030, which must be available by 2031 at the latest. These tenders would also be open to existing plants.

The final draft bill must then be approved under state aid law.

“All power plants built as part of the power plant strategy will be hydrogen-compatible and will be completely decarbonized by 2045 at the latest,” it continues. "In order to further decarbonize the power plant fleet in a targeted manner, additional measures are to be taken to encourage an early switch to hydrogen, so that 2 GW of power plant capacity will be converted to hydrogen by 2040 and a further 2 GW by 2043. To this end, Germany will create a legal framework so that, from 2027, tenders for early decarbonization will also be carried out, which will include contracts for difference for the additional fuel costs associated with an early switch to hydrogen."

The state aid procedure is not yet complete with this agreement in principle on the key points. The power plant strategy must still be finally approved by the European Commission under state aid law after the draft law has been submitted.

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