EU to approve German plans for new backup gas power plants, industry power price, Merz says
Clean Energy Wire
The European Commission will approve Germany’s state support plans for new backup gas power plants and an industry power price, said chancellor Friedrich Merz at a conference on 14 January. The government had "received the news" that EU’s executive arm would greenlight the initiatives “to a large extent”, Merz told an audience at a business conference in Halle.
The government plans to subsidise the construction of a fleet of 10 gigawatts (GW) of gas power plants which can run at times when intermittent wind and solar energy are insufficient to meet electricity demand. The business case for the new gas plants can only be guaranteed with additional state support, which is why the government is negotiating a state aid scheme with the European Commission. Merz's announcement likely refers to a general agreement on the terms for providing state support. The Commission would only be able to give a final green light once German parliament adopts the necessary legislation.
The industry power price, a discounted price for electricity for energy-intensive sectors, also requires approval from the EU under state aid law. The initiative is a core element of Merz’s plan to halt the decline of industry and return Germany to economic growth, but it has run into delays. The government is currently working on the subsidy regulation. In November, the government called on the EU to allow industrial companies to receive several electricity price subsidies at the same time. Merz now said the EU would allow this.
The energy industry has repeatedly said that it is of utmost importance to hold the auctions to build gas power plants as soon as possible, as delays jeopardise the early coal exit in the west of the country. As coal plants are taken offline, other backup resources are needed to ensure security of supply.
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.
“Public funds must not be channelled into programmes that effectively only enable gas-fired power stations,” said Sascha Müller-Kraenner, head of climate NGO Environmental Action Germany (DUH) in response to Merz’s announcement.
