Germany's government has finalized plans to provide subsidies for hydrogen-ready gas power plants, aiming to address gaps in wind and solar energy supply, as announced by the economy ministry on Monday. The proposal includes a tender process for four hydrogen-ready gas power plants with a combined capacity of up to 10 gigawatts (GW), with details of the tender to be disclosed soon.
According to the ministry, the hydrogen transition plans for these plants are expected to be formulated by 2032, facilitating their full conversion to hydrogen between 2035 and 2040.
In addition to the gas power plants, the government plans to subsidize power plants exclusively running on hydrogen, with a capacity of up to 500 megawatts, focusing on energy research purposes. Financial details of this subsidy were not provided in the ministry's statement.
Shares in German utilities RWE and EnBW experienced positive momentum, with increases of 1.9% and 3.6%, respectively, at 1034 GMT. The CEOs of these utilities had previously urged Berlin to progress with the promised strategy, which is now materializing.
Chancellor Olaf Scholz, along with Economy Minister Robert Habeck and Finance Minister Christian Lindner, also agreed to eliminate obstacles hindering the construction and operation of electrolysers. Electrolysers utilize renewable energy to separate hydrogen from water, providing an alternative to fossil fuels. This move is in line with Germany's commitment to achieving its greenhouse gas emission targets.
The German power plant strategy, initially scheduled for completion last summer, faced delays due to a constitutional court ruling that vetoed 60 billion euros ($64.5 billion) earmarked for climate projects. This setback prompted a reconsideration of the budget and a subsequent delay in the strategy's implementation.
These planned hydrogen-ready gas power plants are integral to convincing eastern brown coal states to expedite the phase-out of coal-fired stations, potentially surpassing the official date of 2038. The strategy aligns with Germany's efforts to accelerate progress towards its emissions reduction targets.
While energy producers advocate for gas as a transition fuel due to lower emissions compared to coal, environmentalists remain cautious and resistant to this transition.