Budget crisis fallout: Germany puts power plant strategy on hold
Germany’s budget crisis has forced economy and climate action minister Robert Habeck to postpone his ministry’s long-awaited power plant strategy, Handelsblatt reports. Ministry sources have said that “advancement of the strategy has been postponed for a short time” in order to clarify questions about the government’s Climate and Transformation Fund. Germany’s highest court earlier this month blocked the government from its planned use of 60 billion euros, initially dedicated to respond to the coronavirus pandemic, for the fund. The power plant strategy is expected to regulate the construction of new hydrogen-ready gas power plants with an installed capacity of up to 25 gigawatts (GW), corresponding to 50 large facilities. The new power plants, which would initially be operated with natural gas and later with climate-neutral hydrogen, were expected to be operational from 2030, but that is now unlikely, Handelsblatt notes.
The energy industry has been waiting for Habeck’s power plant strategy for months. With the government’s plans to fund a range of energy transition policies thrown into disarray by the court ruling, however, a quick solution is increasingly doubtful. SPD Bundestag member Markus Hümpfer warned that the power plant strategy was essential for the energy transition. “It would definitely be irresponsible to sit back now,” Hümpfer told Handelsblatt. Without backup power plants, the construction of which is intended to be incentivised by the strategy, “there will be no [early] phaseout of coal, and we should always be aware of that.” Without targeted funding, investors will be deterred from building backup power plants since the facilities are expected to run less and less as the share of renewables increases, making them unprofitable, the energy industry has warned. Network operator TransnetBWA promoted a budget-neutral solution as a possible alternative, based on an existing model that could help fund plant construction through fees payable by electricity customers, facilitating investment. Such a solution could face opposition from the European Commission, however.