German government approves new gas power plant auctions to back up wind and solar | Clean Energy Wire

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13 May 2026, 15:00

Julian Wettengel

Germany

German government approves new gas power plant auctions to back up wind and solar

Gas

Image by Uniper.

The German cabinet has signed off on a law to subsidise new gas-fired power plants through auctions, aiming to guarantee electricity supply as the country phases out coal and expands renewables. The first tenders are planned for late 2026, with the new plants expected to later switch to green hydrogen – but industry warns the timeline is tight, and environmentalists say the plan risks locking in fossil fuels for decades. [CORRECTS in second paragraph: annual costs for 2032-2045 up to 2.3 billion euros, not 2.4 billion euros as previously stated.]

The German government has approved a new draft law to introduce auctions for government support for new gas-fired power plants and other electricity capacity to guarantee supply security as the country rapidly builds out wind and solar power and exits coal.<br>The government expects the plans to cost up to 3 billion euros in the year 2031 – when all tendered capacity is set to be up and running – and up to 2.3 billion euros annually from 2032 to 2045. It plans to introduce a levy in 2031 to finance the plans, in line with EU rules.<br>"Anyone who is serious about expanding renewable energy and phasing out coal must start building flexible power stations and new capacity now," said economy and energy minister Katherina Reiche in a press release. The draft law will now be debated in parliament.

Auctions for state support

Germany’s government plans to initially hold two sets of auctions for new backup power plants with a combined capacity of 11 gigawatts (GW), said the draft. Of these, the first tenders (8 September and 22 December 2026), covering 9 GW, are aimed at so-called ‘long-term capacity’, which is capable of supplying electricity continuously over an extended period, ensuring that even prolonged periods without sufficient renewable energy generation can be covered. It is likely that only gas-fired power plants will be successful in these auctions. Successful bidders receive remuneration for having electricity available once a facility is built, providing the financial incentive needed to invest in the first place.<br>These plants must be 'hydrogen-ready'. According to the draft, this means a power plant that "is designed and constructed in such a way that the capability to operate on 100 percent hydrogen can be achieved by modifying plant components or the operation of the power plant." All power plants subsidised under the planned law must be climate-neutral by 2045 at the latest.<br>The initial auctions will be followed by a further tender for new capacity totalling 2 GW without a long-term criterion (18 May 2027), giving batteries a chance.<br>Further tenders will be held in 2027 and 2029, said the ministry. In addition to generation capacity such as power stations and storage facilities, flexible consumers will also be able to apply, and existing plants will be eligible alongside new ones.<br>All tenders combined are intended to secure the total domestic demand for guaranteed capacity for the year 2031.<br>In 2027, tenders will be held for the conversion of power stations to run on hydrogen. Furthermore, a bill to implement a comprehensive capacity market to secure supply from 2032 onwards will be presented in 2027, said the economy ministry.<br>The new gas plants are seen as crucial to enable Germany to phase out coal as planned. Germany aims to bring the renewables share in power consumption to 80 percent by 2030. After the completion of the coal phase-out, the aim is to achieve greenhouse gas neutrality in the electricity supply. As the country exits the most climate-damaging form of fossil fuel electricity generation and rapidly expands renewable energies as part of its efforts to build a climate-neutral society by 2045, the country must ensure supply security. It aims to build up alternative capacity which it can switch on at times when intermittent wind and solar energy are insufficient to meet demand – so-called “controllable capacity”.<br>Germany has decided that gas-fired units will play a major role during a transitional period, to later be converted to run on green hydrogen. Flexibility options such as large-scale batteries or demand management will also play a role. The government also plans to introduce a capacity market by 2027 to ensure supply security from 2032, beyond the earlier auctions.<br>The government argues that there has been only hesitant investment – or, in recent years, a complete lack of investment – in essential infrastructure such as power plants. "In view of these obstacles and the observable wait-and-see attitude, a comprehensive investment and incentive framework is necessary to ensure security of supply at the usual high level," said the law reform draft. The...