Germany to Finance Hydrogen-Ready Gas-Fired Power Plants

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Germany's coalition government has announced plans to subsidize the largest rollout of new gas-fired power plants in Europe, as long as they are ready to run on hydrogen in the future.

The plan, which was expected last year, will see tenders launched "soon" for four 2.5-gigawatt (GW) gas plants that will receive major financial aid, reportedly in the region of US$17 billion. The Ministry for Economic Affairs and Climate Action (BMWK) said that the proposed plan will allow for the development of "highly flexible and climate friendly" power plants. The first tender will be launched this summer. Hydrogen transition plans will be in place by 2032 in order for the four plants to begin transitioning to hydrogen between 2035 and 2040. It claimed the strategy "ensures that the supply of electricity is guaranteed in a climate-friendly manner even in times with little sun and wind. This will make an important contribution to system stability." The funding will come from the Climate and Transformation Fund, but Germany still has to discuss its plans with the European Union (EU). Last year, Germany and the European Commission had agreed on a German plan to build and operate about 24 gigawatts (GW) of hydrogen power plants and fossil gas units that would later be converted to hydrogen. However, they failed to agree on how they would be subsidized.

The government has also promised to "dismantle" any existing obstacles to the construction and operation of electrolyzers. The planning and approval procedures for the power plants included in the power plant strategy will be "substantially accelerated." The government will also subsidize power plants running exclusively on hydrogen with a capacity of up to 500 megawatts for energy research purposes.

German Economics Minister Robert Habeck hailed the agreement as a key step towards a clean energy system. "We are setting the framework for the conversion and expansion of climate-neutral power plants, while fossil power plants are increasingly being phased out of the market," he told the dpa news agency. "In this way, we are making our electricity system fit for the era of renewables and securing the early phase-out of coal. With our decisions, we are also solving the classic chicken-and-egg problem: a climate-neutral electricity system requires hydrogen and hydrogen-capable power plants -- but who starts with it? That's why you get things started at the same time: you build a hydrogen core network, encourage the construction of hydrogen-capable power plants and provide planning security."

The plan has been broadly welcomed, but some claim it does not go far enough. EnBW board member Georg Stamatelopoulos told Reuters that although it was an important step, the 10-GW target was too low to guarantee a faster exit from coal-fired power by 2030. He also called for a faster planning process. EnBW, RWE AG (Essen, Germany) and Uniper SE (Dusseldorf, Germany) are all expecting to take part in the tender.

Kerstin Andreae, chairwoman of utilities association BDEW, said: "It is extremely important that the federal government has finally made a decision on the power plant strategy. This is a crucial building block for a successful path towards climate neutrality while maintaining supply and system security. The construction of new gas power plants is the basis for the coal phase-out. At the same time, the hydrogen-capable gas power plants are important customers and therefore a relevant component for planning security within the framework of the hydrogen core network. The political agreement must now be followed promptly by a concrete legislative proposal so that the first call for tenders can take place this year."

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