ENBW ENERGIE BADEN-WÜRTTEMBERG AG 
Two major tenders for hydrogen-capable power plants with a capacity of five gigawatts each are planned, said Economics Minister Robert Habeck on Friday after the budget consultations. He confirmed a Reuters report that an agreement had been reached with the EU Commission on the phased construction of the power plants. The Green politician said that this would include two gigawatts of capacity from existing gas-fired power plants that will be converted to hydrogen at a later date, as well as 0.5 gigawatts for new power plants that can run on hydrogen immediately. The first tenders are planned for the end of 2024 or the beginning of 2025.
In total, the construction of 12.5 gigawatts of power plant capacity can be subsidized by the government with the approval of the EU. An additional 0.5 gigawatts of capacity is planned as storage. 0.5 gigawatts is roughly equivalent to the output of a large gas-fired power plant.
Essentially, the planned strategy involves the construction of gas-fired power plants to compensate for the growing but fluctuating feed-in of wind and solar power. The aim is to guarantee security of supply and prevent blackouts in a so-called dark doldrums. The plants are to be gradually converted to climate-friendly hydrogen, but this is likely to be significantly more expensive than natural gas for a long time to come. This is why billions in subsidies are needed, which must be approved by the EU Commission. Whoever demands the lowest subsidy will be awarded the contract in the tenders.
The power plant strategy also determines whether Germany can shut down the last coal-fired power plant by 2030, as demanded by the Greens in particular. Time is therefore of the essence. Energy companies such as RWE, EnBW and Uniper are interested in building coal-fired power plant sites that have to be shut down.
Initially, five gigawatts of natural gas power plants that can also run on hydrogen are to be put out to tender quickly. This will be followed by two gigawatts that will be converted to be climate-friendly. From the eighth year after commissioning, they must be converted to green hydrogen (produced with renewable energies) or blue hydrogen (produced with natural gas, but CO2 is captured and stored). Both investments in power plants and their operation can be subsidized.
In a second pillar, a further five gigawatts of new gas-fired power plants will be put out to tender, for which only the investment costs will be subsidized.
From 2028, a so-called capacity mechanism will also take effect in the electricity market. This will not charge by the kilowatt hour, but will also pay for the capacity provided, even if it is not needed.
According to the German government, this will also be accepted by the EU Commission, but like the entire strategy, it still has to be formally adopted by the fall.
(Report by: Markus Wacket; edited by Olaf Brenner. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).
