German gas plant auctions unlikely to start before late 2026 – law firm
Clean Energy Wire
The start of auctions for state support to build new gas-fired power plants in Germany is set to be delayed until late 2026 due to several necessary regulatory steps, said Anna von Bremen, head of energy innovation at law firm Osborne Clarke.
The government still needs to get a green light by the European Commission to ensure the auctions comply with EU state aid rules. A recent report on supply security had provided essential information for the negotiations, von Bremen said. It is unclear when the Commission would agree to the scheme and under which conditions. In addition, the economy ministry still needs to draft the relevant legislation and then consult stakeholders before a final draft can be agreed by the full cabinet, she argued.
The law must then be debated and decided in parliament for the Federal Network Agency (BNetzA) to work out the auction design and finally schedule the first tender.
“Yes, it is possible to hold auctions by the end of the year – but we are talking about 2026,” said von Bremen at a conference by energy analyst firm Aurora Energy Research in Berlin.
Holger Kreetz, chief operating officer (COO) at energy company Uniper, said that permitting and construction would take at least five years after the auction until a new plant starts feeding into the grid. Kreetz therefore welcomed the government’s idea to speed up auctions for a capacity of 5 to 10 gigawatts (GW) of new gas power plants as a first step.
As Germany continues expanding its wind and solar power capacity while phasing out coal, intermittent renewable power plants need backup capacity that can be switched on at any moment to be developed in parallel. The previous coalition had planned to build around 10 GW of new gas-fired and hydrogen-ready power plants, but the government's early collapse led to significant delays regarding auctions. The current government under chancellor Friedrich Merz now aims to install up to 20 GW of new gas plant capacity. These plants could ultimately be converted to run on green hydrogen, but it is unclear whether the government will introduce binding rules and deadlines to ensure the fuel-switch will be carried out.
Merz's coalition also advocates for applying carbon capture and storage (CCS) technologies to curb emissions from gas plants in the future. However, industry experts at the conference in Berlin said that hydrogen looks set to be the cheaper alternative, especially if the gas plants are used only for periods during which renewables require backup capacity.
“If we take into account the capacity factor and the hours we assume for the future in these power plants, then we think that hydrogen is the cheaper option,” Franziska Weiss, head of business development at Siemens Energy Europe said.
Installing Germany's new gas power plant fleet could also run into difficulties on the ground, grid operator Amprion warned earlier this week. The company's CEO, Christoph Müller, said it would be difficult to find sufficient hardware and personnel to build the power plants, while choosing locations and securing permits would further slow down the process.
