Germany has announced plans to subsidise up to 10 gigawatts of hydrogen-ready power plant capacity in a move to advance the decarbonisation of the country’s electricity system.

Federal chancellor Olaf Scholz, economics minister Robert Habeck and finance minister Christian Lindner agreed to the so-called Power Plant Strategy on Monday to develop “modern, highly flexible and climate-friendly” power plants. 

The officials have agreed to subsidise gas power plants with new capacities of “up to 4 times 2.5 GW” – which is significantly lower than the 23.8 GW initially announced last August. A tender process for the gas plants would be launched at “short notice,” the ministry for economic affairs and climate action (BMWK) said in a statement, without revealing a specific timeline. 

BMWK added that the switch to hydrogen must happen between 2035 and 2040, with the exact date for the switch to be determined in 2032, Kallanish notes. While the ministry did not reveal a budget for the power plant strategy, reports suggest the government will spend €16 billion ($17.1 billion) for the new plants. It will be financed through its climate and transformation fund, which was recently slashed by €45 billion following a budget crisis.

Kallanish is awaiting a response from BMWK for further clarification.

Additionally, the scheme will see the government support the development of up to 500 megawatts of power plants that run “exclusively” on hydrogen for research purposes. Alongside, the government plans to introduce a market-based, “technology-neutral” capacity mechanism to be operational by 2028. To be agreed by summer this year, the mechanism will see power plants being paid by the government to have some power capacity on standby.

The scheme was originally planned for 2026, with 2035 being the deadline for the hydrogen switch. The extension to the deadline has been criticised by experts, warning it is too late.

“New fossil gas power plants must be converted to hydrogen by 2035 at the latest,” Simone Peter, president of the Federal Association for Renewable Energy (BEE), says in a statement. “The extension to a switchover date between 2035 and 2040, as envisaged by the power plant strategy, is not compatible with the climate goals. The federal government must stick to its original date.”

While it is unclear if the government would support carbon capture and storage (CCS) in power plants, the ministry said CCS would be “​​taken up as part of the carbon management strategy.”

The government’s move to potentially enable CCS-supported gas power plants was slammed by environmental groups. In a joint press release, environmental associations, including the German League for Nature and Environment (DNR), Germanwatch, Greenpeace, and WWF Germany said the government was “unnecessarily prolonging” the dependency on fossil fuels.

“Enabling CCS in the energy sector has so far been rightly ruled out politically, because it prolongs dependencies on fossil imports from countries like Qatar or the USA and slows down the energy transition,” the organisations warn. “If we invest in CCS systems now, they will be used for decades.”

Meanwhile, the Association of the Chemical Industry (VCI) called the scheme a “temporary solution,” whilst welcoming the prospect of using blue hydrogen.

German energy company EnBW welcomed the power plant strategy, calling it “a step in the right direction.” However, the firm called for an increase in the 10 GW of capacity, to “not to lose sight of an early implementation of the coal phase-out by 2030.”