Germany Launches New Gas Power Plant Strategy to Secure Energy Supply and Support Climate Goals

Germany has reached a significant milestone in its energy transition by agreeing to construct new gas power plants aimed at securing electricity supply amid the ongoing coal phase-out. Following an agreement with the European Commission, the German government plans to auction 12 gigawatts of new controllable capacity this year, primarily consisting of gas power plants designed to operate as backups during periods of low renewable energy production, known as 'dark doldrums.' The strategy is a key component of Germany's broader goal to achieve climate neutrality by 2045 while phasing out coal-fired power generation by 2038.

Economics Minister Katherina Reiche emphasized the agreement's importance, stating that the tender marks a crucial step towards ensuring supply security and fostering industrial competitiveness. Of the 12 gigawatts auctioned, 10 gigawatts must be capable of providing continuous power by 2031, with the remaining 2 gigawatts open to technology-neutral solutions, including storage. Furthermore, all new plants are expected to be hydrogen-ready, with plans to transition to hydrogen operation no later than 2045. However, this hydrogen transition timeline is later than initial proposals due to current infrastructure and supply limitations.

The project includes substantial state funding incentives to encourage investment, as companies have been hesitant due to low expected utilization rates. Major energy firms, such as RWE and Uniper, are preparing to participate in the auctions. Additionally, the government plans to alleviate costs for energy-intensive industries through subsidized electricity pricing and CO2 emissions cost relief, measures designed to maintain competitiveness during the energy transition.

While the plans have been widely welcomed as a pragmatic solution to Germany's energy needs and climate objectives, environmental groups have criticized the reliance on fossil gas infrastructure, warning it could slow development of cleaner alternatives like battery storage. Green energy advocates call for more ambitious decarbonization targets to accelerate climate protection.

The package must still gain formal approval from the European Commission, with the EU’s state aid procedures ongoing. Subsequent auctions are planned for 2027 and 2029, which will be fully technology-neutral and exclude emissions-intensive plants such as coal. This comprehensive approach balances Germany’s urgent supply security needs with its long-term decarbonization commitments.