Criticism also came from the Association of Local Public Utilities (VKU), which represents municipal utilities. The draft threatens to favor large providers, which could lead to market power and higher costs. Municipal utilities would be disadvantaged by high financial hurdles and strict requirements. The Federal Cartel Office has also criticized the increasing market concentration among a few power generation companies.
NEW CAPACITY OF TWELVE GIGAWATTS PLANNED
In practice, the law initially favors the construction of modern gas-fired power plants. The aim is for a parliamentary decision before the summer break so that the tendering process can begin. In several rounds, new, dispatchable power plants with a total capacity of twelve gigawatts (GW) are to be put out to tender. Of this, ten gigawatts are earmarked for new plants that must be capable of supplying electricity continuously for at least ten hours. Many storage facilities cannot meet this requirement.
Two tenders for these so-called long-term capacities with the ten-hour rule, totaling nine gigawatts, are planned for 2026. The tender will be for the reduced capacity. According to the draft law, this corresponds to ten gigawatts of new nominal capacity. A further two gigawatts of generation capacity are to follow in May 2027.
BILLIONS IN FINANCING VIA ELECTRICITY SURCHARGE
Since the new power plants are costly but intended to run only infrequently, investors will receive compensation for maintaining readiness. Financing is planned via a surcharge to be borne by electricity consumers. According to the draft, the government expects subsidy costs of between one and three billion euros in 2031. From 2032 to 2045, these are projected to range between 0.9 and 2.3 billion euros per year. This will be financed through a levy that electricity consumers will pay starting in 2031.
The new power plants must be convertible to hydrogen operation and must run entirely greenhouse gas-neutral from 2045. Emission-intensive plants such as coal-fired power stations are excluded from the tenders. 'The power plant strategy lacks the ambition for an early switch to green hydrogen', stated Michael Kellner, energy policy spokesperson for the Green parliamentary group. 'The government is missing this opportunity.'
The facilities are primarily to be built in the industrial and populous south and west of Germany and must be operational by 2031 at the latest. This is intended to relieve the power grids and significantly reduce the need for expensive emergency interventions, known as redispatch. They are meant to secure the power supply even during 'Dunkelflauten' - periods with little wind or sun.
The German Association of Energy and Water Industries (BDEW) generally welcomed the draft law. However, for investment security, it is crucial that state aid approval from the EU Commission is obtained before the first tenders begin. Furthermore, care must be taken in the design of collateral and penalties to ensure that small and medium-sized enterprises are not disadvantaged.
(Report by Holger Hansen. Edited by Hans Busemann. For inquiries, please contact our editorial office at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)
- by Holger Hansen
