Negotiations with the EU: Reiche wants quick tender for new gas-fired power plants

Gas-fired power plants are intended to compensate for wind lulls and cloudy days in energy production. The new government is negotiating with the EU regarding possible state aid. Following the agreement, tenders are expected to begin this year.

Federal Minister of Economic Affairs Katherina Reiche wants to quickly get the construction of new gas-fired power plants underway. "We want to launch the first tenders by the end of the year," the CDU politician said at an industry conference of the German Association of the Energy and Water Industries (BDEW) in Berlin. She is in talks with the EU Commission, which must give the green light for the planned state aid. The leading energy lobby group called on the government to ensure sound financing for the planned electricity price relief.

Reiche added on the sidelines of the conference that, as a first step, power plants with a total capacity of between five and ten gigawatts will be put out to tender. "It depends on how far we can reach agreement with the Commission on state aid rules." Initially, these will likely be gas-fired power plants, "because they can be procured quickly and cost-effectively," she said. "If there isn't enough flexible, controllable capacity, we'll run into supply security situations that must be taken seriously. We can't afford to operate on the edge. Many transmission system operators have expressed concern that we are very, very short on reserves."

The coalition agreement envisages the construction of gas-fired power plants with a capacity of up to 20 gigawatts. These are primarily intended to offset fluctuating electricity production from wind and solar energy. State subsidies are planned, so the EU Commission must approve them. The previous German government had also already planned subsidies for the construction of new power plants. According to the concept of former Economics Minister Robert Habeck, the gas-fired power plants should be ready for later conversion to hydrogen. Reiche left this point open.

Reiche reiterated that she intends to make adjustments to Habeck's approach to the energy transition. While the expansion of renewable energy from wind and solar power is a success, that's not all. System costs must be considered. Reiche is thus targeting high costs to eliminate bottlenecks in the grid. The goal is to achieve greater cost efficiency and ensure long-term security of supply.

The minister had already announced a "reality check" of the energy transition to reassess the needs for the expansion of renewable energies, for secure power plant output, and for grid expansion. This could lead to new targets for the expansion of renewable energies.

According to Reiche, the government intends to introduce electricity price relief before the summer break. The package will include a reduction in electricity tax, a reduction in network charges, and the abolition of the gas storage levy, Reiche emphasized.

"If electricity price relief in the tens of billions is being proposed, then it must be financed from the budget," demanded BDEW Executive Director Kerstin Andreae. However, to ensure investment security, the necessary financial resources should not be reduced year after year. BDEW therefore has a "very clear demand" of the federal government to finance the electricity price relief from the core budget and not from the Climate and Transformation Fund (KTF).

Environmental associations want special climate funds

Major German environmental organizations are urging the targeted use of funds from the federal government's new special fund for investments in climate protection. The joint statement, published in Berlin on Wednesday, calls for additional funds of ten billion euros annually for investments in railway infrastructure, as well as the same amount for additional public transport and cycling infrastructure. Climate-damaging investments, however, must be avoided.

The associations are also calling for an additional six billion euros per year for energy-efficient building renovation, for which a total of 20 billion euros would be available. An additional three billion euros would be invested in municipal heating networks, and one billion euros in natural climate protection measures such as the restoration of moors, forests, and floodplains. An additional 2.5 billion euros would be made available for international climate protection, and an additional 0.6 billion euros for the transformation of industry.

However, no additional funding will be provided for new gas-fired power plants or liquefied natural gas terminals, nor for carbon capture and storage (CCS). Road construction will focus on maintenance and rehabilitation. Funds for reducing industrial electricity prices and promoting hybrid vehicles will also be rejected.