Germany's Path to a Green Electricity Market with Hydrogen-Capable Power Plants
Key Ideas
  • Germany plans to introduce a Power Plant Safety Act to facilitate the construction of new hydrogen-capable gas-fired power plants, with a focus on decarbonization and security of supply.
  • The government aims to commission around 8-10 new power plants with a total capacity of 5 GW, requiring a complete switch to hydrogen after eight years, along with the conversion of existing plants.
  • The investment in new power plants and storage facilities is estimated to cost between 15 to 20 billion euros, with funding from the Climate and Transformation Fund, and a capacity market to be established by 2028.
  • Concerns remain about the adequacy of the 12.5 GW of planned hydrogen-capable power plants to meet the required generation capacity by 2031, especially in relation to the coal phase-out and energy transition goals.
In Germany, the government is preparing to implement a Power Plant Safety Act to support the construction of new hydrogen-capable gas-fired power plants. The plan includes a two-stage approach with tenders starting in late 2025 to decarbonize electricity generation, followed by a focus on security of supply. The package involves commissioning 8-10 new power plants totaling 5 GW, with a mandatory shift to hydrogen after eight years and the conversion of existing gas-fired plants. To incentivize technological development, 500 MW sprinter power plants running entirely on hydrogen will be included. Funding for these initiatives will come from the Climate and Transformation Fund, with subsidies for new plants only after commissioning, not before 2030. The total cost of the expansion could range from 15 to 20 billion euros, depending on gas prices and funding levels. A capacity market is in the works to ensure supply during periods of low renewable energy production. However, concerns loom over the adequacy of the 12.5 GW of hydrogen-capable plants planned, with estimates suggesting a need for 17-21 GW by 2031. The government's strategy will complement the Combined Heat and Power Act, focusing on placing new plants near the hydrogen core network. Industry players are awaiting detailed tendering conditions before fully committing to the government's strategy.
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