Berlin At Industry Day, Chancellor Olaf Scholz was optimistic: “Only the approval of the EU Commission is still missing” for the construction of new gas-fired power plants, he said about a week ago. That sounded like a formality.
But according to information from the Handelsblatt from negotiating circles, the situation is different: The EU Commission has major concerns about the plans of the Federal Ministry of Economics to create incentives for the construction of gas-fired power plants with an installed capacity of 25 gigawatts (GW). This is proven by internal notes that are available to the Handelsblatt. The EU Commission does not appear to be willing to grant the Germans’ ideas a subsidy approval.
The new gas-fired power plants are essential for the success of the energy transition – and for the phase-out of coal-fired power by 2030. The new plants must have gone into operation when the last coal-fired power plant has gone offline. In the future, they will be the safeguard for the phases when the sun is not shining and the wind is not blowing.
They thus take on the role of coal-fired power plants: They are available as so-called “secured output”. Initially, they will be operated with natural gas, later with hydrogen.
25 GW is no small thing. Assuming that a single gas-fired power plant is rated at 500 megawatts (MW), 50 new power plants would be required to reach the 25 GW target. That seems very ambitious. And if you also assume that planning, approval and construction of a power plant takes six to seven years, the major new building offensive must begin by 2024 at the latest.
>> Read also: Energy industry submits proposal for new construction of gas-fired power plants
Economics Minister Robert Habeck (Greens) has announced that the first auctions will be held by the end of the year. If you build a power plant, you should get money for it.
A premium is necessary because the new gas-fired power plants will probably be used less and less. Potential operators fear that they will not be able to recoup their investment if their power plant only runs a few hours a year. That is why the provision of the power plant capacity should already be rewarded.
The EU Commission insists on openness to technology and a cross-border solution
The EU Commission is now of the opinion that the steps planned by Germany are to be regarded as a measure to ensure security of supply – and must therefore comply with the European rules for capacity mechanisms. Accordingly, the quantity of the secured service to be tendered must be determined exactly. A fundamental reform of the design of the electricity market is also required, as well as the opening up of the tender for all possible technologies, and that across borders.
A deep chasm has opened up between the ideas of the Commission and the ideas of the Federal Ministry of Economics – which prefers a quick, uncomplicated solution. An industry insider says that the Ministry of Economics is “gradually arriving at the reality of state aid law”.
Clear conditions are required
The industry is now unsettled. For weeks she has been demanding clarity about the conditions under which she should build new power plants. “We need an investment framework, and we need it fast,” said Kerstin Andreae, General Manager of the Federal Association of Energy and Water Industries (BDEW).
It is clear that a power plant that serves as a safety buffer for times when there is little solar and wind power cannot be refinanced by paying for the individual kilowatt hours produced due to the low number of full hours of use. Rather, the provision of power plant capacity must be financed.
Industry insiders report that there are disagreements between Brussels and Berlin on this issue. The Commission insists on rewarding the electricity produced, the Ministry wants to promote the availability of power plant capacity. The Federal Ministry of Economics has officially announced that intensive talks are being held with the Commission. These ran “constructively on all levels”.
More: Desperate search for guaranteed power plant output.