BERLIN: Germany’s government has agreed plans to subsidise gas power plants that can switch to hydrogen, the economy ministry said on Monday, with a price tag of $17 billion in subsidies as part of efforts to supplement intermittent renewable energy and speed up the transition to low carbon generation.
The announcement follows pressure from the industry, impatient for detail after the government had promised the strategy last year as Germany counts on hydrogen to help the country move away from gas and coal.
The tender process for the four gas plants with total capacity of up to 10 gigawatts (GW) would take place soon, the ministry said, without specifying when.
The state support for companies to build and operate the future hydrogen-ready gas power plants will total around 16 billion euros ($17 billion), including capital and operating subsidies, two coalition sources told Reuters on Monday.
The ministry said hydrogen transition plans should be drawn up by 2032 to enable the plants to be fully switched to hydrogen between 2035 and 2040.
EnBW board member Georg Stamatelopoulos said that while the agreement was an important step, the 10 GW goal was too low to ensure an accelerated exit from coal-fired power by 2030, a swift tender process was key given such projects take 6-8 years.
RWE said it planned to take part in the tenders. The government will also subsidise power plants running exclusively on hydrogen with a capacity of up to 500 megawatts for energy research purposes, the ministry said, without providing financial details.
In addition, Berlin said on Monday a new design for the electricity market would introduce a market-based capacity mechanism, to be agreed around the middle of this year to be operational by 2028.
It would reflect increased renewables in Germany’s energy mix, following criticism from environmental campaigners that capacity mechanisms to pay utilities to ensure baseload capacity when intermittent solar and wind power fall short have been used to subsidise fossil fuel production.
Germany’s Deutsche Umwelthilfe environmental group said the agreement, including the financing and tender design remained vague and may lead to gas power plants being built that do not get converted to hydrogen.
It said the agreement considers deploying expensive or uncertain technologies that are still in development, such as nuclear fusion and carbon capture, instead of relying on existing solutions.
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