Germany to almost double gas firing capacity

The German grid regulator and Green-led ministry of economy and climate action aim to construct up to 21 GW worth of additional gas power plants to guarantee a stable and reliable grid, according to internal documents.

By 2030, the German government wants the country to run on 80% renewable electricity and fully phase out coal. Gas power plants are expected to cover the remaining 20% and account for low wind and low sun periods.

“Investments in gas-fired power plants […] continue to make sense provided that corresponding LNG [liquified natural gas] capacities are created and prices normalise,” reads a ministry document.

In total, while German gas consumption is expected to go down due to the electrification of heating, gas power plants are expected to almost double in capacity. In November 2022, gas power capacity amounted to 27.5 Gigawatts (GW). 

Going forward, the regulators note that 17 to 21 GW of extra capacity will be built, as part of their bi-annual grid stability report for the period of 2025 until 2031. This would be the most cost-effective approach, the regulator adds.

The government took ownership of this suggestion, the documents confirm, confirming that Germany’s path has hardly diverged, despite the fact that its largest gas supplier, Russia, turned off the tap.

In October 2021, Markus Krebber, CEO of energy company RWE, predicted similar figures. “We need about 20 to 30 gigawatts of new gas-fired power plants in Germany,” he told WirtschaftsWoche.

To ensure that enough gas is available, the government is strongly committing to LNG. “The import capacities of LNG are to be further increased in Germany,” the document adds. 

Already by the end of 2023, Germany’s LNG import capacity will approach two-thirds of the volumes it once received from Russia – with additional projects in the pipeline. Civil society and environmental NGOs already chafe in the face of what they perceive as an expensive oversupply.

In order to address their concerns, the government insists that future gas power plants must be ready to run on hydrogen.

Germany’s first LNG terminal is open for business

Deprived of cheap Russian gas, Germany’s alternative infrastructure to import liquefied natural gas (LNG) is now coming online, opening a new era in German energy policy.

European electricity market

The regulator’s report also stressed the importance of the cross-border EU electricity market. 

“‘Open borders’ allow fluctuating generation and consumption to be balanced out cost-effectively through cross-border trading and exchange of electricity,” the report notes.

The European Commission is in the midst of revamping the electricity market design, which is heading for an overlap with Germany’s own efforts towards a new approach.

“The German government will continue to play an active role in the adjustments to the European electricity market design announced by the European Commission,” the document said.

Special heed would be given to “ensure that the European rules pave the way for a climate-neutral electricity system.” 

In Germany, experts have begun work through the platform “climate neutral electricity design,” with particular focus on ensuring that electricity storage providers are sufficiently remunerated to address renewables’ intermittent nature.

Germany split over EU’s suggested electricity market reform

The EU’s Agency for the Cooperation of Energy Regulators (ACER) has recommended splitting up Germany’s single electricity bidding zone in a move that prompted concern in the country’s south, where prices are kept artificially low.

[Edited bt Nathalie Weatherald]

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