In addition to the continued consistent expansion of renewable energies and the electricity grids, the security of supply of the German electricity system requires the support of conventional power plants for the time being, but politicians want these to be as modern, highly flexible and climate-friendly as possible. For this reason, Federal Chancellor Olaf Scholz, Economics Minister Robert Habeck and Finance Minister Christian Lindner agreed on the key elements of a power plant strategy as well as on further plans.

In search of a market-oriented, technology-neutral capacity mechanism

It was agreed that work on the future design of the electricity market would be continued immediately and, in particular, that concepts for a market-based, technology-neutral capacity mechanism would be developed, which should be operational by 2028 at the latest. The political agreement required for this is to be reached within the Federal Government by summer 2024 at the latest. In addition, the Federal Ministry for Economic Affairs and Climate Protection (BMWK) will also present an options paper for a political agreement involving the parliamentary groups on the future electricity market design in summer 2024, taking into account the Climate Neutral Electricity System Platform. Security of supply will be considered through electricity security analyses that also include scenarios with conservative and crisis-like assumptions.

Security for investors

The power plant strategy creates the framework for investments in modern, highly flexible and climate-friendly power plants, which should also be able to use hydrogen in the future. The strategy is also intended to ensure that the supply of electricity is guaranteed in a climate-friendly manner, even in times when there is little sun and wind, in order to make an important contribution to system stability. In order to quickly implement a corresponding number of power plants, the power plant strategy should immediately stimulate the early construction of new power plants. The tenders as part of the power plant strategy will therefore be designed in such a way that the new power plants are fully integrated into the future capacity mechanism.

New power plant capacities with up to ten gigawatts of output

Specifically, it has been agreed that new power plant capacities of up to four times 2.5 gigawatts will be put out to tender as hydrogen-capable gas-fired power plants at system-beneficial locations in the short term as part of the power plant strategy. These are then to be completely converted to hydrogen between 2035 and 2040 from a switchover date to be set in 2032. The subsidies are to be financed from the Climate and Transformation Fund.

The development of new energy technologies is being accelerated

The development of new technologies, such as nuclear fusion, and corresponding test runs are to be supported with suitable instruments in future. Power plants that run exclusively on hydrogen are to be funded up to 500 megawatts as part of energy research. Carbon capture and storage for electricity generation plants using gaseous energy sources will be addressed as part of the carbon management strategy.

System-friendly incentives for the production of hydrogen

With the new power plant strategy, it was also decided to remove existing obstacles to the construction and operation of electrolysers without restriction. All opportunities are to be used to accelerate the expansion of electrolysers in particular, which are operated in a way that serves the system. Furthermore, there must be no double charging of levies and fees on electricity for storage and electrolysis, so that there are market-based and system-beneficial incentives to produce hydrogen.

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Bureaucratic hurdles to be reduced

The use of surplus electricity should also be made possible without restriction and all existing regulatory hurdles should be removed as far as possible. The planning and approval procedures for the power plants included in the power plant strategy are also to be substantially accelerated. The agreement reached on the power plant strategy will be discussed with the EU Commission in Brussels and then consulted with the public. The Federal Ministry for Economic Affairs and Climate Protection intends to build on the constructive talks held with the EU Commission last summer.