The planned tender to build 20 new gas power plants this year is approaching and operators are ready to get started. However, there has been no progress from the federal government so far. The blocks are needed to reduce the price of electricity.
In 2023, Germany completely phased out nuclear energy, and the gradual phase-out of coal will run until 2038 at the latest. Although renewable energy should gradually take over a larger share of electricity generation in Germany, new base-load power plants are also needed. What this means is that these power plants can step in if sun, wind and water cannot provide enough electricity for a short time.
The federal government has identified gas-fired power plants as an alternative. Because coal and nuclear energy capacities are no longer available, many of them have to be rebuilt. In a first step, around 20 power plants with a total output of 10 gigawatts are to be built by 2030. These will only run on natural gas until the mid-2030s, when they will switch to green hydrogen. The power plants must be built today so that they can process both raw materials.
Federal Economics Minister Robert Habeck (Greens) presented the key points of this strategy at the beginning of February. Little has happened since then. Not only is not a single power plant under construction yet, not one has even been put out to tender. So far, power plant operators can’t even apply. There are many details missing that still need to be clarified.
For example, there is the question of where the new power plants should be built. If the federal government does not specify any locations, many will probably be needed in northern Germany. In the future, most green hydrogen will be produced here with the help of wind energy or delivered by ship, so the distances to gas power plants would be short. However, the systems are more likely to be used in the south of the country, where the expansion of renewable energies is already lagging behind, while the north is full of wind turbines.
In addition to regional distribution, the question of where the power plants should be located is also crucial. Finally, they must also be connected to suitable power lines so that the electricity generated can be quickly distributed throughout the country. To ensure that these do not have to be rebuilt, Green Party politician Anton Hofreiter recently brought up the former locations of decommissioned nuclear and coal-fired power plants at the Ludwig Erhard Summit. After all, they are already optimally connected to the network. “With sufficient regionalization of the power plants, redispatching and network expansion costs can be saved,” says Stephan Kapferer, head of the transmission system operator 50Hertz, to the ZfK. This ultimately has a positive impact on the electricity price for consumers.
The second catch in the power plant strategy depends on money. The federal government wants and must promote the construction of power plants. A funding budget of 15 to 20 billion euros is planned by 2040. This alone could be used to build the required 20 gas power plants; a power plant with an output of 500 megawatts costs around 500 million euros. But the funding goes beyond just construction. Since gas power plants do not run continuously, but only step in for a short period of time when renewable energies do not provide enough electricity, they cannot be operated economically solely by selling the electricity they generate. The operators of gas power plants must receive money even when their plants are shut down.
For this purpose, a so-called capacity market is to be created from 2028. There, power plant operators are paid for providing capacity, even if it is not used. However, the capacity market is also regulated, so that, for example, climate-friendly hydrogen power plants are preferred over gas power plants that can only be operated with natural gas. However, exactly these details have not yet been clarified for the new power plant strategy. Operators cannot yet calculate the funding amounts from the federal government and therefore cannot yet submit concrete offers for construction.
Germany would like to introduce the capacity market across the EU. This would save all countries costs because every EU member would not have to have their own power plants. After all, it is almost impossible for the whole of Europe to experience a dark doldrums at the same time. This in turn has a positive effect on the electricity price for individual consumers, because the costs for the capacity market would be passed on to all electricity recipients. However, 26 other member states still need to be convinced to create such a market. According to the federal government, this should be regulated by summer.
Despite all the missing details, the first power plants are scheduled to go out to tender this year. The first systems could then go online in 2028. 10 gigawatts by 2030 is realistic, but for experts it is the lower limit. The Federal Association of the Energy and Water Industry assumes that the coal phase-out could be brought forward to 2030 with 15 gigawatts. The Federal Network Agency assumes a requirement of 17 to 21 gigawatts.
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