Germany says new gas power plants will be online by 2031 following EU deal
The European Commission and the German government have reached a preliminary deal that would allow the country to incentivise the construction of new backup gas-fired power plants with federal funds, the economy and energy ministry said.
“With the short-term tenders for twelve gigawatts of new, additional controllable capacity, we are laying the foundation for a secure electricity supply in Germany in the future and thus for the competitiveness of our industry,” said economy minister Katherina Reiche.
Under the agreement:
- Germany will hold state support tenders for 12 gigawatts (GW) of “controllable capacity” in 2026
- Ten GW of this volume “must be able to generate electricity continuously over a longer period of time” [likely largely gas-fired power plants]
- These 10 GW “will be in operation by 2031,” said the ministry
- Further rounds of tenders will follow in 2027, and in 2029/2030 for “controllable capacity” that also must be available by 2031 (including existing power plants)
- All newly built tendered gas-fired capacity must be “hydrogen-ready”, and "decarbonise" by 2045 at the latest [phrasing leaves open the option of carbon capture and storage - CCS]
- Additional measures will incentivise the switch to hydrogen (2 GW by 2040, 2 GW by 2043): tenders for support for the difference of the cost between hydrogen and fossil gas (to take place from 2027)
The deal includes small changes to an agreement presented by the coalition government in November 2025. The government must now prepare the actual legislative reform, for the European Commission to then give the final green light for the state aid scheme.
The new gas plants are seen as crucial to enable Germany to phase out coal as planned. As the country exits the most climate-damaging form of fossil fuel electricity generation and rapidly expands renewable energies as part of its efforts to build a climate-neutral society by 2045, the country must ensure supply security. It aims to build up alternative capacity which it can switch on at times when intermittent wind and solar energy are insufficient to meet demand – so-called “controllable capacity”.
It has decided that gas-fired units will play a major role during a transitional period, to later be replaced by facilities that run on green hydrogen. Flexibility options such as large-scale batteries or managing demand will also play a role. Burning fossil gas leads to fewer greenhouse gas emissions than burning coal for electricity generation. However, emissions along the entire value chain – from extraction, to transport and liquefaction to produce easier-to-ship liquefied natural gas (LNG) – can cancel out the climate benefits of the fuel. The government has yet to present a long-delayed report assessing the coal exit effects on elements like supply security and climate targets, and a follow-up assessment is already due by August 2026.
The business case for the new gas plants, which are set to run during brief time periods, can only be guaranteed with additional state support, which is why the government is negotiating a state aid scheme with the European Commission. The EU has strict conditions for member states seeking to provide state support, including in the energy sector.
Talks have been going on for years. The previous coalition government reached a very similar agreement to today’s deal with the Commission in mid-2024. However, the scheme was never finalised due to the government’s early breakup and snap elections, and the country’s new leadership decided to restart the talks, instead of using the existing draft law. It initially aimed for a much higher capacity volume for new gas plants (20 GW), but it had looked increasingly unlikely that the European Commission would allow this.
Government must follow up with "simple" capacity market proposal – energy industry
Several renewable energy providers and climate groups have logged complaints with the European Commission against the government’s plans for new gas power plants. They argue that these would distort competition, unnecessarily drive up the costs of the energy transition, and slow down clean alternatives. Instead, the government should subsidise large-scale storage, and measures to reduce electricity consumption during peak times, they said.
"By effectively committing to a high proportion of gas-fired power stations, the German government is missing the opportunity to spark competition for the most cost-effective supply of electricity possible," said Simon Wolf, head of German and European climate policy at NGO Germanwatch.
Energy sector representatives welcomed the announcement. Kerstin Andreae, head of energy industry association BDEW, said it was "absolutely necessary" that after three years of talks, Germany and the EU had finally agreed. She welcomed that Germany will not only provide state support for new power plants in a first round of tenders 2026, but also launch additional tenders to support new and existing "controllable capacity" in 2027 and 2029. "These address the total demand for controllable output for the year 2031," she said.
The government also plans to introduce a capacity market by 2027 to ensure supply security from 2032, beyond the earlier auctions.
The government now had to move fast and present a "simple" system open to all technologies, said Andreae. "This model must incentivise the construction of further capacity, including flexibility and storage, and also take into account the existing biogas plants, combined heat-and-power plants and hydroelectric power stations," she said.
