Germany expects EU approval for eastern coal plant operator's compensation “in next weeks”

The German government expects the European Commission to approve compensation payments for coal company LEAG “in the next weeks,” the economy ministry (BMWK) has said. The coalition parties recently agreed on the legislative changes needed to enable the disbursement of up to 1.75 billion euros to the eastern German lignite operator as part of the country’s plan to end coal-fired power generation by 2038 at the latest.

Approval by Brussels for the payments – originally agreed in 2020 – is now “within reach,” the ministry said. In 2023, the EU had already cleared RWE’s compensation for shutting down its lignite plants in western Germany by 2030, but talks over LEAG’s package had dragged on due to the later phase-out timeline in eastern Germany.

Under the new plan, LEAG, owned by Czech investor EPH, will be reimbursed 377 million euros for previous payments into funds for the recultivation of mining areas. The compensation scheme is part of Germany’s Coal Exit Law, designed to mitigate the social and economic impact of the transition, and which stipulates that these costs are covered by federal money. From 2025 to 2029, the company will receive annual payments of 91.5 million euros from Germany's budget to complement these funds.

In addition, LEAG may receive further compensation for so-called “social costs” related to the coal phase-out. Payments could continue until 2042 if the national grid regulator BNetzA determines that the operator suffered lost profits due to plant closures or related infrastructure decommissioning. Critics have argued that the payments could cover profits the companies might not have earned under market conditions. Earlier this year, LEAG announced it would place parts of its coal fleet in reserve over the summer, citing higher renewable power generation.

While western Germany’s coal exit is advancing rapidly, with the phase-out now expected by 2030, progress in the east remains slower. LEAG continues to play a key economic role in structurally weak regions such as Lusatia, where the coal phase-out is closely tied to the build-out of new gas-fired power capacity. Germany plans to tender up to 20 gigawatts of such plants to ensure security of supply — a process that has been delayed for nearly two years and still awaits EU approval.