Germany's plans for back-up power station fleet face €60 bln funding gap - analysis

The funding of new power plants for back-up capacity in Germany is facing significant uncertainties that can only be resolved through resolute state support, an analysis by research institute EWI for newspaper Handelsblatt has found. The country lacks about 60 billion euros in secured funding for the much-needed back-up capacity until 2030 that cannot be covered by earnings on the power market and therefore require “other incentives” to raise the required investments, EWI researcher Philipp Kienscherf told the newspaper. Gas-fired back-up plants that can switch to hydrogen at a later stage are supposed to step in at times of little renewables output, but are difficult to finance because they will likely only run for a very limited amount of time each year. This means the plants are not able to recover their own investment costs, especially if they are to run on costly green hydrogen. “These are politically desired investments that cannot be carried out based on market mechanisms at the moment,” Kienscherf commented.

The EWI analysis has put a price tag on the government’s power plant strategy, which has been delayed for months and is expected to be released this year. The strategy under the aegis of the economy and climate action ministry (BMWK) is supposed to spell out funding and construction conditions for some 25 gigawatts of back-up capacity that should be ready by 2030. The energy industry warned in December that the government coalition’s goal of pulling the country’s coal phase-out forward to the end of this decade hinges on the availability of alternative plant capacity, and that the country can no longer afford to delay their construction.