EU sets state support conditions for German gas and hydrogen power plants – econ min

The European Commission has set important framework conditions for planned German state support to build and operate about 24 gigawatts (GW) hydrogen power plants and fossil gas units which will later be converted to hydrogen, the economy ministry (BMWK) has said in a press release. The ministry and Commission have worked out a “common understanding” for support to build such gas-fired power plants, which the government considers a necessary supplement to intermittent renewables to secure the electricity supply. “The progress made [in the talks] with the European Commission are an important first step, even if this does not mean that the intended measures have already been approved by the European Commission under state aid rules,” said the ministry. The official state aid consultation process will continue after the summer break. Over the past few months, Germany and the EU agreed on important legislation to speed up renewable energy expansion, said economy minister Robert Habeck. “Now it is a matter of initiating the conversion of our power plant fleet to hydrogen and thus set the course to achieve climate neutrality for the entire electricity sector.” Habeck said the results of the talks with the Commission meant that his ministry could now develop the power plant strategy, which it had promised earlier this year to show how to guarantee supply security in the future. Contrary to earlier plans to have the first auctions this year already, the minister said these would start in 2024.

The economy ministry said the joint understanding with the Commission covered state support for three different schemes:

1. Tenders for 15 gigawatts (GW) of new and existing gas units which have to be converted to hydrogen by 2035 (10 GW set to be auctioned already from 2024-2026, of which up to 6 GW new).
2. Tenders to support power production from renewables-based hydrogen in 4.4 GW “hydrogen sprinter power plants” in regions with early access to the fuel; auctions 2024-2028 for new projects or converted gas power plants.
3. Tenders for 4.4 GW of projects that combine renewable electricity with electrolysers for green hydrogen production, hydrogen storage and hydrogen power plants.

With a planned future energy system based on intermittent renewable electricity generation, Germany will need solutions to guarantee its supply in times of little wind or sunshine; such as bioenergy, imports from neighbouring countries, storage systems or the hydrogen power plants. These units would only run when needed, such as during peak demand hours. Last week the German government agreed on an update to its National Hydrogen Strategy with the aim of speeding up the development of a market for the fuel, which it sees as essential for the path to climate neutrality by 2045.