German gas plant auctions likely to be delayed by missing legislation and European Commission approval

Planned auctions to support new gas-fired power plants in Germany are likely to be delayed. Several essential regulatory steps are still missing before they can get under way. Anna von Bremen of law firm Osborne Clarke says the end of 2026 is a realistic date for the auctions to begin. Clean Energy Wire reported.

Germany's governing coalition parties agreed in their coalition agreement to install up to 20 GW of new gas-fired power plants to ensure electricity supplies during periods of low renewable generation. Economy Minister Katherina Reiche said in the middle of this year that at least the first 5 GW should be included in auctions by early 2026.

However, as the end of 2025 approaches, it is becoming almost certain that Reiche will not meet her target. Germany still needs to take several steps to get the auctions under way, including passing national legislation and, not least, obtaining the European Commission's approval that the proposed measure complies with EU state aid rules.

"Yes, it is possible that an auction will take place by the end of the year, but we're talking about 2026," Bremen said.

Regulator confirms need for new dispatchable capacity

Bremen noted that the recently published report by German regulator BNetzA on ensuring security of electricity supply provides sufficient information for talks with the Commission.

The report finds, among other things, that unless German electricity consumption becomes more flexible and shifts to periods of high renewable generation, or renewable development targets are met, Germany will need to build up to 35.5 GW of new dispatchable capacity by 2035. Even if Germany meets its targets for renewable energy and grid development, however, BNetzA forecasts a need to install up to 22.4 GW of new dispatchable capacity over the next 10 years.

According to Bremen, it is uncertain whether or when the European Commission will approve Germany's support scheme for new gas-fired power plants. The relevant legislation will also need to be finalized and consulted on with key market participants. Only after it has been debated in parliament will BNetzA be able to draw up the details of the auctions and then schedule their first round.

Gas turbine market conditions could extend construction timelines

Germany's state-owned energy company Uniper is among those planning to take part in the upcoming auctions. The company recently scaled back its ambitions for renewable energy development and said it would focus more on developing gas-fired power plants.

Uniper Chief Operating Officer Holger Kreetz warned, however, that permitting and building new gas-fired power plants after securing auction support will take at least 5 years.

Preparation of new power plants could also be delayed by tight conditions in the gas turbine market, where orders are currently "queuing up." An analysis by Wood Mackenzie says the situation could last until 2040—another 15 years.