After the previous coalition government’s Power Plant Safety Act was no longer passed following the end of the governing coalition, the negotiations between the CDU/CSU and SPD for a new coalition gave fresh impetus to German energy policy. Not only is the future federal government creating the necessary financing basis with the special infrastructure fund - the specific use of which has not yet been finally agreed - but, according to the coalition agreement, it also wants to incen-tivise the construction of new (reserve) gas-fired power plants. The plans have been praised in principle by the industry but also scrutinised in detail.

 

Background

Germany has set itself ambitious climate targets: The country is to be climate-neutral by 2045, with at least 80% of electricity from renewable energies by 2030. These targets are based on the Re-newable Energy Sources Act (EEG) and international commitments such as the Paris Climate Agreement and are intended to serve the long-term ecological sustainability of the German and international economy.

However, renewable energies do not always supply the same amount of electricity: according to the German Association of Energy and Water Industries (BDEW), wind turbines, solar parks and other renewable plants produced 63.5 billion kilowatt hours of electricity in the first quarter of 2025, 16% less than in the first quarter of the previous year. The main reason for this was the weather during this period, in particular weak winds. Overall, the share of green electricity in electricity con-sumption from January to March was only 47%, compared to 56% in the same period in 2024. With the decision to phase out coal in 2030 already on the horizon, both politicians and businesses are looking for ways to compensate for dips in green electricity and maintain both security of supply and grid stability.

 

Current developments and legal foundations

The CDU/CSU and SPD were able to agree on the following projects in their coalition agreement.

From line 1067 it says:

“We will create reliable framework conditions for investments in sufficiently secure capac-ity and security of supply by organising tenders that are open to all technologies as quickly as possible. We want to incentivise the construction of up to 20 GW of gas-fired power plant capacity by 2030 as part of a rapidly revised power plant strategy that is open to all technologies.”

It goes on to say:

“A larger energy supply serves to stabilise and reduce electricity costs. In future, reserve power plants will not only be used to avoid supply bottlenecks, but also to stabilise the price of electricity.”

This course is also confirmed by the Federal Executive Committee of the CDU, with Deputy Federal Chairman Andreas Jung stating, for example: “As a reliable partner for volatile renewable energy, we need new gas-fired power plants quickly." At the same time, the overall system needs to be reorganised so that renewables can play an increasingly important role: "Expansion in such a way that the electricity produced can be used efficiently, a market-based framework for energy storage and close integration with a pragmatic hydrogen ramp-up.”

These announcements are currently prompting electricity suppliers, project developers and other market participants to prepare for the expected tenders for new gas-fired power plants. Specific details on the tenders are not yet known. It is likely that the new government will be guided by the Power Plant Security Act, which has not yet been passed: Among other things, this provided for tenders for a total of 7 GW of gas-fired power plants, of which 2.5 GW should have already been put out to tender as planned at the beginning of 2025, with a further 2.5 GW and 2.0 GW then in 2026 and 2027 respectively. The 20 GW of capacity now planned is considerably more ambitious than the 7 GW of capacity planned by the previous governing coalition. It is already foreseeable that the originally planned schedule cannot be adhered to.

The Power Plant Security Act plays a key role in ensuring security of supply during periods of darkness. This is particularly true in view of the recent large-scale power outages in Spain and Portugal. The expected legal framework conditions and targets are fundamental for the power plant industry to be able to foresee how the tenders to be carried out by the Federal Network Agency will be conceptualised. If a company is awarded the contract for a certain location and a certain capac-ity, it must usually submit proof of financing as well as apply for the necessary licences, such as a building permit, a water permit or an emission control permit, from the respective state authorities.

 

CCS vs. H2-Ready

Energy companies such as EnBW are generally willing to get involved in the construction of new gas-fired power plants: “In principle, we are already willing to get involved with projects,” assured CEO Stamatelopoulos. However, it depends on the specific tender process conditions: “An exciting question will be how the tenders organise the regional management of the power plants.”

However, the plans to equip the new gas-fired power plants with CCS technology are being criti-cised. The main reason for this is economic circumstances: the new CCGT power plants are espe-cially intended to act as an energy reserve. It is therefore possible that they will only be utilised at low capacity. To take this aspect and the lack of CO2 transport infrastructure into account, the CCS plants would have to be significantly larger than is the case with coal-fired power plants, for exam-ple. This would make CCS “extremely expensive”, says Stamatelopoulos.

“The right way” to decarbonise new gas-fired power plant capacities is hydrogen instead. Blue hydrogen could be considered as a replacement for natural gas during the market ramp-up phase, as it will be cheaper to obtain worldwide than green hydrogen. According to this, it is more important that new CCGT power plants are H2-ready for the future, i.e. hydrogen-capable, than that CCS plants are available for their (residual) use as a fossil energy reserve (this is also the assessment of other market participants according to a recent survey by energate).

 

Outlook

It remains to be seen how quickly and under what conditions and requirements the announced gas-fired power plants will now be put out to tender. Just a few days after being sworn in at the Tegernsee Summit, the new Minister of Economic Affairs, Katherina Reiche, announced that she would ‘very quickly go out to tender for at least 20 gigawatts of gas-fired power plants in order to maintain security of supply in our country’. It remains to be seen whether and to what extent CCS technology will be used in the new power plants or whether a hydrogen-compatible design will be prioritised in the planning and realisation of CCGT projects in Germany. We will keep you up to date with our insights in the future.