Reform to extend German state support for combined heat and power until 2035
Clean Energy Wire
Germany is set to extend state support for combined heat and power (CHP) plants until 2035 and make them more flexible so they can better complement intermittent wind and solar generation, according to reform plans published by the economy ministry.
The reform, which the government hopes will take effect early next year, aims to strengthen investment certainty for plant operators. It also aims to make CHP generation more flexible, with incentives to avoid feeding power into the grid when electricity prices are very low or negative.
“Combined heat and power remains an indispensable component of a secure electricity and heating supply,” economy minister Katherina Reiche said. “Particularly when wind and solar power do not provide sufficient energy, we need plants that can step in flexibly and reliably supply electricity and heat.”
CHP plants are thermal power plants that produce both electricity and heat, mostly by burning fossil gas or coal, but are able to utilise more primary energy than traditional power plants. Due to their efficiency, the technology has been seen as a way to lower emissions. However, as renewables-based solutions for electricity and heating become more widely available and cheaper, the focus has shifted to CHP’s ability to secure supply at times of low renewables feed-in.
“We will strengthen our security of supply whilst ensuring that our energy system remains efficient and affordable for the public,” Reiche added.
Industry groups largely welcomed the plans. The support measures would give operators additional incentives “for the more flexible deployment of CHP plants as partners to renewable energy sources and prepare them for the next phase of the energy transition,” said Kerstin Andreae, head of the association for energy and water industries (BDEW). Municipal utility association VKU also welcomed the proposals. The group’s chief executive, Ingbert Liebing, said that “they send an important signal regarding investment security, supply security and the heat transition.” Both groups urged the government to extend the act until 2038, to coincide with the federal coal phase-out deadline.
Because of decreasing power prices and shorter operating hours, municipal utility managers have long said that they need support to operate CHP plants.
CHP is only one element in Germany’s heating transition. Earlier this year, the government adopted a new version of the country’s heating law, removing the requirement for new heating systems to include a minimum renewable energy share. While this allows homeowners and businesses to install new fossil-fuel heating systems, it comes with long-term risks: some municipal heating plans, which are non-binding, aim to decommission municipal gas networks, and fossil fuel prices are set to rise.