Aurora: Germany's new gas-fired power plants will not come online before 2030

The German government hopes that recently announced auctions will lead to 10 GW of new gas-fired power plants being built by 2030. However, researchers at Aurora Energy Research say meeting this deadline is unlikely, given the time needed to plan and build large power plants. The international news outlet Montel reported.

The German government approved a long-awaited power plant strategy in early July, under which auctions will be held for a total of 12.5 GW of installed capacity from dispatchable power plants and 500 MW of storage facilities.

The first round will include an auction for support for 5 GW of new hydrogen-ready gas-fired power plants and 2 GW of upgrades to existing plants. These facilities must switch to operating on green or blue hydrogen from their eighth year after commissioning or upgrading. In addition, tenders will be held for 500 MW of installed capacity from plants running entirely on clean hydrogen and 500 MW of long-duration energy storage facilities.

The second round will include a tender for a further 5 GW of new gas-fired power plants. The plants are expected to be built mainly in southern Germany to reduce redispatch costs and contribute to grid stability.

Protracted negotiations with the European Commission

However, according to researchers at Aurora Energy Research, the government’s plan to bring the planned gas-fired plants online before 2030, enabling the planned phase-out of coal-fired power plants, will be difficult to achieve.

“We expect gas-fired capacity to be developed mainly in the early 2030s,” Aurora analyst Nicolas Leicht said, noting that building a large power plant usually takes 5 to 7 years.

The main reason the original schedule is expected to be missed is the delay caused by lengthy negotiations between Germany and the European Commission over whether the proposed operating support scheme complies with European state aid rules.

Germany also had to reduce its original target for new gas-fired power capacity by roughly half during negotiations with the European Commission.

Funding through a new levy on electricity bills

Funding for the new operating support scheme for dispatchable power plants is expected to come through a new levy on the final price of electricity, according to information published by the international outlet Clean Energy Wire. The levy has not yet been set, but initial estimates suggest it will not be substantial.

The levy is expected to become part of the existing charge supporting electricity from combined heat and power. As Clean Energy Wire noted, taxes and levies currently make up around 27% of the final electricity price for German households.